Tax deductions take a walk on the weird side: what you should know

Tax refunds can be boosted by clever tax deductions, and what you can claim may surprise you.

Some truly strange tax deductions are available to Australians, yet people still push boundaries beyond the realms of weirdness.

Accountants have reported taxpayers attempting to claim groceries, Disneyland holidays, family pets, parking fines, cigarettes and footy club memberships.

However, other equally odd deductions may be legal, depending on your job. Think moisturiser, butcher’s knives, working horse expenses, hair styling, condoms and fetish equipment, luggage and garden gnomes.

The Australian Taxation Office has 40 occupation and industry specific guides available to download at ato.gov.au to give millions of workers an idea of what is legally deductible, and tax accountants are also a great help.

The ATO monitors your deductions, and if they are larger than the typical range for your occupation, it will question you – often while you’re still completing your tax return.

NDA Law’s Lisa Christo says the ATO is “very proactive”. Picture: Tricia Watkinson

NDA Law senior associate Lisa Christo says the ATO has “some powerful tools at its disposal” including data-matching with banks, government agencies, online platforms and insurance companies.

“They are also very open about asking the public to dob in tax cheats — it’s a serious business and the ATO is very proactive in this area,” she says.

“Each year they issue thousands of ‘please explain’ letters before moving to instigating a full audit.”

Christo says people’s ability to respond to ATO queries will depend on how well they have kept receipts and other documentation.

OK TO CLAIM

Expenses directly related to earning income are usually claimable, including photographic portfolios for performing artists, face masks and sanitiser for health, retail and hospitality workers, and gifts for real estate employees on commissions.

Christo says Covid-19 tests are deductible when related to attending work.

Author and financial adviser Helen Baker says sun protection is deductible for people who work outdoors including gardeners, road workers and builders.

“However, if you use them for both work and pleasure, you can only claim the work-related portion,” she says.

“Use your common sense here too: claiming Gucci sunglasses or a fascinator for the races will ring alarm bells at the Tax Office.”

Baker says rehydrating moisturisers and hair conditioners are tax deductible – but only for airline crew. “They can claim specialised rehydrating treatments used to combat the abnormal drying conditions of working in a pressurised aircraft,” she says.

More broadly, uniform and laundry expenses can be claimed by millions of people with specific work uniforms, Baker says.

Accountant Gregory Voulelatos from dmca advisory says real estate investors can claim many deductions related to their property.

“Even something like a garden gnome can be claimed as a tax deduction, as this is a decorative item you buy to make your investment property look more attractive to new tenants,” he says.

NOT OK TO CLAIM

Voulelatos says he has come across clients claiming their dog as a deduction where it is used as a form of security for a business.

“In saying this, the ATO would not deem a chihuahua as security — however, something more suitable for the purpose such as a German sheppard or rottweiler would,” he says.

Most people can’t claim fitness expenses such as gym memberships, unless they are firefighters or special operations police officers who require a high level of fitness, Voulelatos says.

And don’t even try to claim speeding fines or parking fines, even if you incurred them while working.

“Fines are not tax deductible, Voulelatos says. “I do see a lot of parking fines hidden among parking expenses,” he says.

Landlords cannot claim travel expenses to check their properties, after the ATO stopped this several years ago because people gamed the system to claim Queensland holidays as tax deductions.

“No travel at all in relation to rental properties is tax deductible, unless you are carrying on the business of letting rental properties,” Voulelatos says.

Chartered accountant Adrian Raftery says car expenses can be claimed when used for work purposes, such as between workplaces, but not travelling between home and work “as the expense is private”.

“You cannot claim it even if you do minor tasks — such as picking up the mail, you are on call and your employer contacts you at home to come in to work, or there is no public transport near where you work,” Raftery says.

TO CLAIM A WORK-RELATED DEDUCTION:

• You must have spent the money and you weren’t reimbursed

• The expense must directly relate to earning your income

• You must have a record to prove it — usually a receipt.

Source: ATO

Originally published as Tax deductions take a walk on the weird side: what you should know