If you are a small business person or indeed anyone slightly financially conscious you’ll know that as tax time comes around, there’s often a mad scramble to ensure every deduction you are entitled to is evidenced by proof and granted by ATO.
What’s an acceptable depends largely on the business you’re in, and the circumstances of the deduction.
That’s what Mark Chapman, Director of Tax Communications at H&R Block Australia told Business Insider recently. Chapman said that the “basic rule is that if you have to buy it to help you earn a living, it should be deductible.”
Now it’s a big world of specialisation these days which implies that there must be some extraordinary things claimed as deductions.
Chapman said that was certainly the case noting that “if the way you earn a living is slightly unconventional, the taxman shouldn’t be too surprised if some of your tax deductions are equally unconventional.”
So we asked him to share some of the extraordinary deductions he’s seen recently.
1. An X-box, pool tables and ping-pong tables. Don’t rush out and load up the rumpus room. Context matters. “If they are used in a business context (perhaps as part of a communal recreation room in a factory or office), they should be deductible, either straight away or over time,” Chapman said.
2. Works of art. Even the art dealer spruikers selling $20,000 works of art for the new small business tax deductions might be right, Chapman said. That is provided the artwork is being used to “decorate the reception area or the boardroom and not for private purposes (such as hanging in the owner’s living room!)”.
3. Sex toys. Adult performers use them as a “tool of trade” and so they are deductible. We’re guessing high heels might be too, and probably pole dancing lessons.
4. Dogs. Guard dogs can be eligible when the business or owner needs the protection they offer.
5. Sunscreen. Yep, if you work outdoors then you can claim sunscreen, Chapman says.
6. Mime lessons and a ceremonial sword. Are you an actor or a sword swallower? If you are then your lesson and your sword are tax deductible. We reckon this list might be endless and extremely interesting. New guitar? Sure. Footy boots? Of course. Sex toys? Oh, we’ve done that.
So how do you justify the deductions?
Chapman says all you have to do is “keep records, whether that be invoices, receipts or bank statements.” He added that if you are claiming something unusual, “expect to be challenged by the ATO but if the way you earn your assessable income is aligned with the items you’ve claimed a deduction for, you should be OK.”