Reasonable Business Expense - The Chartered Institute of Taxation

Reasonable Business Expenses: Discussion paperA perusal of the regime for performing artists shows a similar trend tothe rules highlighted above 264 , but these rules are specifically designed toaccommodate the peculiar demands of the work of these entertainmentprofessionals. 265 As regards costumes, the cost of conventional clothingacquired or hired as a costume for a role is deductible. Expenditure onspecial costumes such as clown outfits and leotard pants are similarlytreated. 266 Deductible expenses include fees paid to theatrical agents; 267costs of coaching classes to maintain existing skills, acquire specificwork-related skills or obtain specialist skills for a particular role orperformance; 268 expenses to maintain a very high level of physical fitnesssuch as that required by a trapeze artist; 269 and costs of grooming, makeupand hairstyling. 270 Private expenses including normal cost of meals, 271childcare expenses 272 and gifts of flowers, alcoholic beverages and the264265266267268269270271272In that the rules are identical to those for legal and journalist professionalsas regards reimbursements and fringe benefits (excluded from income anddeductions); travel expenses (deductible if work-related, apportionmentallowed for dual purpose expenses); plain uniforms and conventionalclothing (non-deductible); compulsory uniforms and protective clothing(deductible); non-compulsory uniforms and corporate wardrobe items(deductible if formally registered); home office running expenses andtelephone rental and charge costs (deductible if work related; apportionmentor dissection allowed where dual use exists): see the Australian Tax Office’sTax Ruling TR 95/20 – Employee Performing Artists – Allowances,Reimbursements and Work-related Expenses; see also “Performing Artists2005”, by the Australian Tax Office, Canberra, May 2005, available athttp://www.ato.gov.au/content/downloads/NAT2325-05.pdf, pp. 3 – 4, 6, 8.See the Australian Tax Office’s Tax Ruling TR 95/20 – Employee PerformingArtists – Allowances, Reimbursements and Work-related Expenses; see also“Performing Artists 2005”, by the Australian Tax Office, Canberra, May2005, available at http://www.ato.gov.au/content/downloads/NAT2325-05.pdf.“Performing Artists 2005”, by the Australian Tax Office, Canberra, May2005, p. 6.Excluding initial joining fees; auditioning fees are equally excluded: ibid, p.8.Ibid, p. 8.As opposed to (non-deductible) general fitness maintenance expenses: ibid,p. 9.Ibid, p. 9.Special deduction rules apply for overtime meals: ibid, p. 9.Ibid, p. 8.Bode OyetundePage 50 of 63PhD CandidateCentre for Commercial Law StudiesQueen Mary & Westfield College