Tax time 2022: These unusual tax deductions could cost you dearly

Pet expenses, video games, bullets and high heel shoes are among the weird – and wrong – deductions getting people in tax trouble.

Pet pugs, Disneyland trips and high heel shoes are among Australians’ outrageous attempts at tax deductions, as accountants warn people to avoid the temptation to claim illegal expenses amid surging living costs.

Authorities are increasingly seeing people claiming private household expenses such as food, rent and transport, while others are double dipping by claiming working from home expenses twice or other expenses that were reimbursed by employers.

Chartered Accountants Australia and New Zealand tax leader Michael Croker said some people had been claiming deductions for post-Covid family reunion flights as business trips, cosmetic surgery and even a football club family membership as “stress relief”.

“There were a few reports of people trying to claim a portion of their home groceries because ‘it’s expensive to live’,” Mr Croker said.

Disneyland is not a tax deduction, accountants say. Picutre:Joshua Sudock/Disneyland Resort

“Our advice as chartered accountants is simple: play it straight or you’ll land yourself in hot water with the ATO,” he said.

The ATO uses high-tech data matching systems to spot illegal deductions, and people who claim incorrectly will be forced to repay the debt, plus interest, and also pay penalties between 25 and 75 per cent of the tax shortfall, depending on the severity of the cases.

ATO assistant commissioner Tim Loh said what people could claim would depend on their job.

“If you are a chef you can claim the knives, if you are a hairdresser you can claim the scissors and if you are Bob the Builder you can claim the hard hat,” he said.

“The best thing to do is to check out our nearly 40 occupation guides which can help you work out what you can and can’t claim.”

Mr Loh said there were three golden rules for work-related deductions. They needed to directly relate to earning your income and not be private in nature, you must have spent the money yourself and were not reimbursed, and you must have a record to prove it – ideally a receipt, he said.

“Any asset that costs more than $300 either in total or per item, such as a computer, can’t be claimed immediately,” Mr Loh said.

“Instead, you can only claim the decline in value in accordance with its effective life.”

No matter how cute she is, your pet pug is not tax-deductible.

10 WACKY AND WRONG TAX DEDUCTIONS

• Expenses for a pet pug whose owners described it as a business mascot that “welcomed customers and staff”.

• 6000 rounds of ammunition claimed by a shooting club member for “pest control”.

• Helicopter trips between hospitals, claimed by a doctor as work-related travel.

• A trip to Disneyland, claimed as “research” by an architect.

• A Fremantle Dockers Football Club family memberships claimed as “stress relief”.

• A child’s piano lessons, claimed as staff training.

• A swimming pool as “emergency water storage”.

• High heel shoes claimed as protective equipment by a saleswoman.

• Camping gear claimed by a tradesman.

• Video games and streaming services claimed by a retail assistant who called himself an entertainment consultant.

Source: Chartered Accountants Australia and New Zealand, ATO.

Originally published as Tax time 2022: These unusual tax deductions could cost you dearly