Chartered accountant GAIL FREEMAN has compiled a few of the more unusual tax claims some people try to get away with… and what not to do in your tax returns.

A taxpayer tried to claim his overseas wedding reception as a work-related conference, claiming part in his return and part in his new spouse’s return. 

The new spouse was prosecuted! 

As a Christmas treat, I’ve lightheartedly compiled a few of the more unusual tax claims some people try to make… and what not to do in your tax returns. 

For instance, have you bought Lego for your kids for Christmas? No surprises that you can’t claim it as a business expense, but one taxpayer (unsuccessfully) tried to.

Then there was the senior executive who claimed deductions of more than $100,000 including business meals on the way to a family skiing holiday, sunscreen and sunglasses (even though he worked indoors) and $5000 to his seven-year-old son for secretarial support. And he thought that was okay! It wasn’t. 

If cigarettes help you reduce stress or you think you can claim sunscreen and an umbrella to walk to the park for “smoko” forget it – these are just not valid claims.

Don’t try and claim your new personal car, which is not used for business purposes, under the instant asset write off provisions. It’s just not a valid tax claim. 

If you are keeping a logbook for your car make sure you are in the country and working on the dates shown in your logbook. 

It’s nice to see someone with a nice smile but you can’t claim the dental work on your tax return as being essential to finding a job. 

Don’t try and claim dog food as security costs for your business unless the dog really is a guard dog. 

Have you ever thought of claiming the costs of a trip to give blood as a donation? Someone did and was unsuccessful. 

While the World Cup is on and everyone is passionate about football, don’t try to claim your club membership as either being critical to your family’s wellbeing or for stress relief. It is just not acceptable. 

A builder tried to claim for sunscreen and hand cream. The cost of sunscreen was allowed but the hand cream was regarded as a private expense. 

How does the ATO screen out these claims? There are many ways, but typically the ATO compares total claims across an industry. So if you’re a public servant, your claims are compared to those of other public servants and if yours are too high then your return is taken off line and you may be audited. 

The best way to avoid this is to check your claims carefully make sure you satisfy three criteria

The expense must relate directly to earning your income. 

You must have incurred the expense. 

You must have the records to prove it.

There is no claim if the expense has been reimbursed, if it is capital in nature, if it is a private or domestic expense, if it produced exempt income or if the deduction is expressly prohibited by the Income Tax Assessment Acts.

The team at Gail Freeman & Co wish you all a Merry Christmas and a happy and prosperous New Year and if you need any help with your claims give us a call on 6295 2844 or visit gailfreeman.com.au

Disclaimer
This column contains general advice, please do not rely on it. If you require specific advice on this topic please contact Gail Freeman or your professional adviser.