Melbourne man claims he worked 365 days per year in tax return

An Aussie IT specialist claimed he worked from home every day of the week and almost all of his car trips were job-related.

An IT consultant attempted to claim more than $30,000 of “work related” expenses on his tax bill after saying his job required his service 365 days of the year from home.

Those expenses included driving his BMW for “service calls” and paying his wife more than $6000 for cleaning his home office, with the man claiming a former federal minister had given him tax advice.

Alexander Shugai’s 2022 claims, including being on call for bosses in New York between 6am and 11pm every day, were described as “fanciful” as a tribunal denied his challenge against the Commissioner of Taxation earlier this month.

An IT consultant attempted to claim more than $30,000 of “work related” expenses on his tax bill.

The tax office had audited his lodgment “because (it) considered that deductions claimed by him in that income tax return were greater than those claimed by taxpayers of comparable employment”.

Mr Shugai, the Administrative Review Tribunal (ART) heard, claimed nearly $8000 for home insurance, council rates, council rubbish bins and home office repairs. He also tried to write off more than $10,000 for plants and equipment.

Another $11,420 was claimed for payments to his wife for tax management, office cleaning and document storage.

“Whilst any cleaning services provided by the applicant’s spouse would have been of some value to him, such services are inherently of a private and domestic nature,” the tribunal found.

The Melbourne-based technical architect also attempted to claim 97.5 per cent of expenses for his BMW car – totalling $5,327.92 – logging several trips as “client service call” or saying they were to buy office supplies.

He claimed 100 per cent of his home internet bill, half of the gas bill and 40 per cent of power – totalling almost $3400.

The Australian Taxation Office questions 500,000 returns each year. Picture: AAP Image/Lukas Coch

ART senior member Robert Cameron wrote that Mr Shugai’s assertion that the level of his expenses had been approved by ex-federal minister Alan Tudge “defies belief”.

“The purpose of such evidence appeared to the Tribunal to be a misguided effort at contending that his claims for deductions had some Ministerial imprimatur,” Mr Cameron said.

“This evidence was fanciful. No documentary corroboration of such evidence was provided by the applicant.

“It defies belief.”

Mr Cameron found Mr Shugai’s evidence during the hearing “unsatisfactory”, saying he had a “propensity towards exaggeration, embellishment and/or implausibility”.

One example of an embellished answer was when Mr Shugai “somewhat flippantly stated”, the judgment says, that his local manager would not know his full work schedule.

His employer had told the tribunal his working hours were between 9am and 5pm Monday to Friday, with the occasional call with international colleagues outside business hours.

“I report to New York. My manager is in New York,” Mr Shugai told the hearing.

“I am present 365 days per year.”

Some of the items claimed included water, sugar and insect spray.

The tribunal found Mr Shugai’s suggestion that he works seven days per week from 6am to 11pm “has all the hallmarks of implausibility”.

Mr Cameron found it was clear ICE Data Services International Australia was Mr Shugai’s employer.

“No entity employing the applicant in New York was identified by him,” the judgment states.

“If his employer was in New York, presumably paying him a salary, no foreign source income or tax paid on any foreign source income was disclosed in such income tax return as one would have expected.”

‘Toilet paper, coffee’ claims

Mr Cameron wrote that Mr Shugai shared his home with his wife, children and father.

Despite this he claimed during the hearing that “I am the only person in the house now using heating”.

Mr Shugai claimed he was the “biggest user of gas” in the home, telling the ART he used gas-powered hot water while washing his hands during work.

He also claimed the home internet was exclusively used for his employment, Mr Cameron wrote.

“There seems no rational reason why the other members of the household would not use that internet connection rather than maintain separate internet accounts,” the tribunal member stated.

“Once again, this evidence of the applicant has an air of total unreality to it. The Tribunal cannot accept it.”

As for his consumerable claims, Mr Cameron laid out some of the items Mr Shugai stated were bought solely for business purposes.

“What emerges from an examination of such receipts is that on their face they are for goods or services of a private or domestic nature,” he wrote.

“For instance, there was a music book, toilet paper, medications, private personal health insurance, milk, tea, coffee, bottled mineral water, sugar and insect spray.”

Mr Cameron affirmed the tax commissioner’s objection decision made in September 2023.

In a statement, the Australian Taxation Office said it “welcomes the decision by the Administrative Review Tribunal but does not propose to make any further comment on this case as it is still within the appeal period”.

The ATO has questioned more than 500,000 people’s income tax returns in the last two financial years respectively.