People like to get creative with their individual tax returns and the ATO aren’t copping it anymore. They have fancy software with fancy search mechanisms and those dodgy or flat out made up deductions may not slip through the cracks this time.
Here are some deductions that aren’t actually deductions:
- Meals eaten at work
Wouldn’t it be lovely if the government paid for your food? Sounds too good to be true, because it is. If you are on a work or business trip, that’s different. But if you left the ham sandy in the fridge and went to the café next door for a gourmet salad, that’s your problem unfortunately.
- Your “uniform” (cough)
Buying black pants and tailored blazer to fulfil your workplace’s attire policy doesn’t mean you can claim a uniform allowance. The only time this applies would be if that blazer has the company logo on it, otherwise it’s considered your everyday wardrobe. The same goes for the laundry bill (which let’s be honest you’ve literally made up). For you to be eligible for a deduction, you’ve got to show how the laundry cost was calculated.
- HECS or HELP payments
We aren’t even sure where this nugget of fake wisdom came from… but the government most definitely doesn’t give you a tax break for paying back the debt you own them for your university course.
- The entirety of your mobile and internet use
These are things you certainly can claim, but within reason. The ATO don’t want to know about your entire mobile and Internet bills for the year. You need to work out a rough percentage of that bill that’s genuinely been used for work purposes. Netflix streaming on your lunch break does not count guys.
- Travel costs
Yes, you can absolutely claim some travel costs. But the ride to and from work each day doesn’t count; it’s private travel. Unless of course you are carrying bulky tools and materials to and from work, that’s a different story.
- Entertainment expenses
No, that espresso martini is not a work cost. Yes, it may be at a work function but that’s an unnecessary expense it simply isn’t deductible. Even the expensive dinner and wine you paid for to win that new client isn’t a tax deduction.
- Home office
This option is becoming very popular for a lot of Australian’s, which is great. If it’s simply you working for an hour after dinner because you’ve got a deadline to meet, that’s not going to give you much of a deduction. If you work from home once a week every week, you’re certainly eligible. Amount of hours and other factors will depend on the method used to claim expenses, but be careful not to do it wrongly and turn your house into a taxable asset for Capital Gains Tax purposes (future blog post coming soon). An example of a claim is for the actual floor space you’re using in your home. For instance, you might be using one eighth of your home for work. Bills are then divided to reflect that.
“But how will they ever know?” you might be thinking. That fancy software we mentioned earlier actually takes people in similar industries and jobs, and compares you against them. If your deductions aren’t matching up within reason, you can look forward to the ATO going through your claim with a fine tooth-comb.
Remember, these are just general rules to stick by. For a tailored tax return, which maximises your deductions, get in touch.