The strangest tax deductions claimed, and knocked back, by Australians

Thierry Chesnot/Getty Images
  • Claiming a tax deduction for your dog.
  • And for gym membership.
  • But is edible underwear tax deductible?

The Australian Tax Office is paying attention this year to claims for deduction from individuals, especially those little fudged areas such as claiming for expenses that have nothing to do with work.

Common mistakes include claiming where there is no connection to income, slipping in private expenses, or not having receipts.

H&R Block, the tax agents, says the basic rule is that you can claim it if you’ve incurred an expense as part of your job.

A taxi driver can claim fuel for his car and a tradesman can likely get a deduction for an array of essential tools.

However, H&R Block gets a few outlandish claims this time of year, including:

  • A tradie tried to claim the cost of a European trip because, he said, this was a journey to research his craft. The tax agent agreed he’d taken some nice photographs but his craftsman skills weren’t noticeably advanced.
  • One taxpayer put in a claim for edible underwear. H&R Block has no idea why but the tax agent politely declined to put the claim to the ATO.
  • Another argued for a tax deduction for his smoking habit, as a form of stress relief. The tax agents didn’t agree.
  • One man claimed sunscreen and an umbrella because his office forced him to go to the park across the road to have a smoke. This also was knocked back.
  • Claiming a tax deduction for your dog. In very limited circumstances, the cost of acquiring the animal (depreciated over several years) and for the keeping it (food, vet bills) can be claimed. The two most common scenarios where the cost of a dog is tax deductible are farming where an animal might be used to round up sheep and security, where the cost of a guard dog to patrol business premises might be allowable. Pets are excluded.
  • Many try to claim for the cost of traveling from home to work and back again. Usually, they are unsuccessful because the daily commute is regarded as private overhead. The only exception is where you’re required to carry bulky tools and equipment and you have nowhere secure at work to store them. That exception didn’t apply to the hairdresser who tried to claim the daily commute because she had to transport her scissors and clippers.
  • A very limited number of taxpayers can claim gym memberships. Among those who can are professional sportspersons, some police officers and some defence force personnel. Bouncers aren’t on the list so the bouncer who wanted to claim his martial arts course fees was politely declined.

Mark Chapman, Director of Tax Communications at H&R Block, says the key to claiming any tax deduction is to keep records such as invoices, receipts and bank statements.

“If you are claiming something unusual, expect to be challenged by the ATO,” he says.

“But if the way you earn your assessable income is aligned with the items you’ve claimed a deduction for, you should be OK, no matter how strange it is.

“One final piece of advice; if in doubt about what you can claim, talk to a tax adviser who’ll be able to give you specific guidance on your situation.”

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