Sprung! The wildest claims people have made on their tax returns

Australians have been warned against exaggerating their work-related expenses as the Australian Taxation Office reveals some of the worst offenders, including a truck driver who claimed their swimwear to take a dip on a hot day.

On Wednesday, the Tax Office picked out three “wild” and “outrageous” examples out of the millions of tax returns it sorted through last year. “Spoiler alert,” it said, “an air fryer generally won’t make the cut.”

The Tax Office says people making claims should be asking themselves whether their deductions pass the “pub test”.Credit: Aresna Villanueva

Turns out, there was a mechanic who tried to claim a series of household goods: an air fryer, microwave, two vacuum cleaners, a television, gaming console and gaming accessories as work-related. The ATO denied these expenses, saying they were “personal in nature”.

A truck driver was also denied their claim after they tried to claim swimwear as a work expense because it was hot where they stopped in transit, and they wanted to go for a swim.

ATO assistant commissioner Rob Thomson said while some people tried their luck with “unusual” work-related deduction claims, they needed to meet strict criteria. Exaggerated deduction attempts would not be tolerated.

“While a lunchtime dip might clear your head for work, swimwear for a truck driver is clearly not deductible,” he said. “If your deductions don’t pass the ‘pub test’, it’s highly unlikely your claim would meet the ATO’s strict criteria.”

Thomson said exaggerated or mistaken claims could be picked up through the ATO’s data and analytics, and that penalties could apply in some cases.

“Where something doesn’t look right, the ATO will get in contact with you to be able to show that you’ve got records to substantiate your claim, and also explain why that claim relates to your work income,” he said. “The penalty can depend on whether we think someone has made a mistake, or if they’re just being reckless or disregarding the law.”

Last year, a fashion industry manager was also denied her claim of more than $10,000 in luxury-branded clothing and accessories, which she said had been bought to be well-presented at work, and to attend events, dinners and functions. “The clothing was all conventional in nature and was not allowed,” the ATO said.

While Thomson acknowledged people could make mistakes, he said most could be avoided with “a little time and effort”.

The ATO’s three golden rules when claiming work expenses

1. You have spent the money yourself and were not reimbursed.
2. The expense relates directly to your job or the income that you earn.
3. The expense is not private in nature (or you need to make sure to claim deductions only for the work component).

“Work-related expenses must have a close connection to your income-earning activities, and you should be prepared to back it up, with records like a receipt or invoice,” he said, noting travel to and from work and childcare costs could not be claimed. “When in doubt, look for guidance on the ATO website or speak with your registered tax agent.”

The latest statistics from the ATO show that in 2021-22, work-related expenses continued to be the single biggest contributor to the tax gap: the difference between the amount the Tax Office expects to collect if every taxpayer were fully compliant with the law and the amount that is actually collected. In 2021-22, the gap was a shortfall of $948 million.

While there are many wild claims, Thomson says one in particular sticks with him.

“Last year, we had someone that worked in a laundromat that tried to claim about $30,000 on their overseas safari trip as a work-related expense,” he said. “Obviously, that one was a personal expense.”

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