Overly optimistic Aussie workers have often tried it on when testing the Australian Taxation Office (ATO) over work-related deductions in their annual tax returns.
This week, the ATO revealed some of the dodgiest deductions workers tried to claim – in vain – and offered advice to taxpayers on where it draws the line.
“If your deductions don’t pass the ‘pub test’, it’s highly unlikely your claim would meet the ATO’s strict criteria,” said Rob Thomson, ATO’s assistant commissioner. (The ‘pub test’ is a reference to the understanding that people have a collective and natural sense of when something is unfair.)
He reminded taxpayers not to try to claim personal spending as work-related expenses because the ATO carefully measures claims to ensure they meet the office’s strict criteria.
Last year, some of the more dodgy claims the ATO rejected included:
- A claim for home equipment and recreational devices such as an air fryer, microwave, two vacuum cleaners, a TV, a gaming console, and gaming accessories from a mechanic.
- Swimwear claims from a truck driver who said they would swim during transit stops.
- An over-$10,000 claim of luxury-branded clothing and accessories from a manager in the fashion industry who wanted to look well-presented at work.
Chartered Accountants ANZ added to the list by sharing some of the ‘cheekiest claims’ its members’ clients had tried on, promising more revelations later this month. These included monthly salon haircuts, an engagement ring, the cost of a gym membership, and even big-ticket luxury purchases, including a luxury yacht – all considered dubious.
“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,” said Thomson.
Last year, most of the tax claims among more than 10 million work-related deduction cases related to working from home. The ATO advises home workers to calculate their deductible return using the fixed rate method or the actual cost method, which requires records to prove they incurred additional expenses due to working from home.
“If you’re anything like me, a paper receipt will get lost almost immediately. The MyDeductions tool on the ATO app allows you to keep records of your work and general expenses to make lodging your tax return easier,” said Thomson.
The ATO also gives out more information on specific deductions for different job occupations in its occupation and industry-specific guides.
- Further reading: Labor’s tax on unrealised super gains: What it means for business
