Tax time is upon us so tax is a particularly relevant subject right now, with millions of people dwelling on the possible deductions they might be able to claim.
Depending on your area of employment, there are a range of tax deductions that could be available.
The basic rule is that if you’ve incurred an expense as part of your job, you can claim it.
For instance, if you’re a taxi driver, you can claim fuel for your car, while if you’re a tradie, you can likely claim a deduction for an array of essential tools.
Such examples are relatively straightforward and obvious, but with tax being something of a grey area for many, it is inevitable that some of the claims tax specialists encounter aren’t always of the typical variety.
A tradie left Australia for a European trip. On his return, he tried to claim back expenses from his sojourn as “researching his craft”.
Sure, he’d taken a few nice photos and brushed up on his French but his craftsman skills weren’t noticeably advanced so the deduction wasn’t allowable.
Why would edible underwear be tax deductible?
No, we don’t know either so we politely declined the claim put forward by one taxpayer.
We all know smoking is bad for you but those who indulge have been known to argue that it reduces their stress levels.
On that basis, one taxpayer argued for a tax deduction for his habit as a form of “stress relief”.
We sent that one up in smoke.
Sunscreen and a brollie
It’s well established that you can claim sunscreen if you work outdoors and clothes to protect you from the elements can also be deductible when you work in a harsh climate.
We drew the line with the client who wanted to claim sunscreen and an umbrella because his office forced him to go to the park across the road to have a smoke, where he was occasionally exposed to either sun or rain.
Taxpayers in the adult entertainment industry can claim all manner of interesting deductions.
There’s even an argument – untested, so far as we are aware – that breast enhancements could be tax deductible as a “tool of the trade”.
It’s a controversial claim even for adult performers but the lady – with no known connection to the adult industry – who tried to claim that her enhancements were necessary for work was always facing an uphill battle.
We couldn’t see the connection and didn’t allow the claim.
Can you claim a tax deduction for your dog?
In very limited circumstances, yes you can, both for the cost of acquiring the animal (the cost is depreciated over several years) and for the costs of keeping it (food, vet bills, etc.).
The two most common scenarios where the cost of a dog is tax deductible are farming (where an animal might be used to round up sheep, for instance) and security (where the cost of a guard dog to patrol business premises might be allowable).
Other than that, forget it.
So, for the client who “occasionally” took his dog to work to guard his tools and equipment and on that basis tried to claim for the dog’s food, the claim was politely declined.
How he guarded his tools and equipment on the days he didn’t take his dog to work, we never found out.
Work travel … with a twist
Lots of people try to claim for the cost of travelling from home to work and back again.
Usually, they are unsuccessful because the daily commute is regarded as private – not work-related – travel and hence not claimable.
The only exception is when you’re required to carry bulky tools and equipment and you have nowhere secure at work to store them.
That exception didn’t apply to the hairdresser who tried to claim the daily commute because she had to transport her scissors and clippers, which might have been sharp but certainly weren’t bulky.
Martial arts classes
A very limited number of taxpayers can claim gym memberships.
Among those who can are professional sportspersons, some police officers and some defence force personnel. Bouncers aren’t on the list so the bouncer who wanted to claim his martial arts course fees was politely declined.
The key to claiming any tax deduction is to keep records such as invoices, receipts and bank statements.
If you are claiming something unusual, expect to be challenged by the ATO, but if the way you earn your assessable income is aligned with the items you’ve claimed a deduction for, you should be OK, no matter how strange it is.
One final piece of advice: if in doubt about what you can claim, talk to a tax adviser who’ll be able to give you specific guidance on your situation.