With tax time just around the corner, let’s take a look at some of the weird expenses Australians have attempted to claim on their tax return.
Every year at tax time there are people who try to get away with claiming some rather strange deductions, but officials have issued a warning to those trying to add any sneaky extras to their claims.
From dog food, Tim Tams and even weddings, these are some of the wild things taxpayers have tried to claim over the years.
Chartered Accountants Australia and New Zealand tax leader Michael Croker said he and his team have heard some “real doozies” come through around tax time.
“One tax agent reported a client trying to pass off dog food as ‘security costs’ for their business. While feeding a guard dog may be deductible in some cases, your household pet doesn’t quite make the cut,” he said.
“Another tax agent had a client who worked as a male ‘entertainer’ and asked whether he could not declare his cash income at the same time as claiming expenses for the job.
“Safe to say, our tax agent politely pointed out that this wouldn’t be possible, and he needed to report his income to the ATO or potentially face some hefty fines.”
Mr Croker said while these examples provided a good chuckle, it was not a wise idea to try to sneak these things past the ATO.
“While these are a few hilarious examples of people getting creative with their tax claims, our advice as chartered accountants is pretty simple: Don’t take the mickey or you’ll land yourself in hot water with the ATO,” he said.
Australian Taxation Office assistant commissioner Tim Loh has also hinted at some of the bizarre items people have tried to claim in the past.
Speaking on the ATO Tax inVoice podcast, Mr Loh said tax officers would be looking very closely at people attempting to incorrectly claim personal expenses as a deduction.
There are many things you can claim, particularly if you are working from home, but unfortunately your favorite snack is not one of them.
“So, for example, someone’s trying to claim expenses for tea, coffee and Tim Tams when working from home,” he said.
“These are personal expenses. You can’t claim a deduction for personal expenses or the personal portion of your expense.”
Mr Loh also warned that you can’t claim a work-related expense if your employer has provided the item or funded you.
“It’s really important that people don’t copy and paste the deductions from last year,” he said.
“We do expect to see changes in what people can claim on their tax return this year, as I said before, due to the changing work circumstances as a result of the pandemic.”
Speaking ahead of tax time last year, Mr Loh also said some taxpayers attempted to claim toilet paper.
“There’s always a few funny ones,” he told NCA NewsWire at the time.
“Toilet paper – people have been trying to claim dunny roll as a tax deduction, but obviously that’s a private expense, so you can’t claim that.”
Some also tried to claim their Netflix subscription, even those who don’t work in a relevant industry like entertainment or media.
Speaking on the Tax inVoice podcast this year, Mr Loh said there had also been cases of taxpayers trying to “double dip”, particularly when calculating their working from home expenses.
He said there were three different methods that could be used to calculate your working from home deductions.
The first is a fixed rate method of $0.52 per hour that you are working from home.
Mr Loh said you need to have a separate work area, such as a home office, to claim this method. The $0.52 per hour covers electricity and declines in value of furniture.
On top of that, with this method, you can claim things like phone, internet and depreciation of technology.
“These expenses are claimed separately,” he said.
“But as I said before, you can only claim the work component, not the private component. So if have you been using Netflix, you’re not gonna be able to claim the deduction for the internet that you use for Netflix.”
The second method is the actual cost method, which allows you to calculate the work rate expenses you incur while working from home.
The third method is the temporary shortcut method that is due to end on June 30 this year, meaning it can still be used for this year’s tax return.
When using this method, you can claim $0.80 per work hour, for every hour that you work from home.
“Now, the thing with any of these methods is making sure you don’t double dip. So we have noticed some people claiming deductions using the temporary shortcut method, but then they try to claim, you know, additional expenses on top,” Mr Loh said.
“So you can’t claim depreciation of a laptop or other items on top of that $0.80 per hour.”
Other bizarre tax deductions over the years
There have been a number of other weird tax deductions Australians have attempted to claim over the years, including wedding reception costs, new cars and Lego sets.
In 2019, the ATO released a list of some of the most ridiculous things people had tried to sneak into their tax claims.
One of the most outrageous was the cost of a $58,000 overseas wedding reception, listed as a work-related overseas “conference”.
The taxpayer reportedly claimed $33,087 on his return and $25,259 in his wife’s tax return.
The claim was denied in full and the wife was prosecuted.
Another person attempted to claim Lego gift sets for his children on tax, while others attempted to deduct the cost for sporting equipment for their child athletes.
More than one person has tried to claim the purchase of a new car, often in excess of $20,000.
A personal car that is used for personal use and not business purposes cannot be claimed against the $30,000 instant asset write-off threshold.
Childcare is also a major expense many Australians have tried to claim, with the ATO seeing statements on claims where the person has written: “The cost of raising a newborn is expensive.”
One person even attempted to claim $20,000 for raising twins.