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Cosmetic surgery, a clown suit and caravanning: Bizarre tax deductions
An accountant spills the beans on some of the weirdest and wackiest tax return deduction claims he has seen.
Cosmetic surgery, a clown suit and caravanning: Bizarre tax deductions
An accountant spills the beans on some of the weirdest and wackiest tax return deduction claims he has seen.
H&R Block’s director of tax communications, Mark Chapman, has dealt with plenty of tax returns in his career.
Speaking to nestegg, he has divulged some of the most “challenging” attempts to claim expenses he has seen, as well as some of the allowable — but “weird” — claims that are only applicable to very small sectors of the working population.
Q: What are some of the craziest things you have seen people attempt to claim on their tax return?
A: We certainly see clients who want to claim some fairly “challenging” deductions. Among the claims we’ve had to knock back are:
- Cosmetic surgery, often sought to be claimed by people whose jobs depend on their looks such as models, entertainers, adult performers etc.
- Cigarettes for the client who claimed they provided a source of stress relief in his difficult job.
- An umbrella for the client who used it to stay dry during smoke breaks in the park outside his office.
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 where 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.
Q: What are some items that seem ridiculous or crazy that might actually be allowable by the Tax Office?
A: A dog can be deductible provided you use it in your work or business. Typical examples would be a security dog used to protect a builder’s yard or a sheepdog used on a farm (make sure the breed of dog is appropriate for the claim; poodles usually don’t fit the bill).
Sex toys for a performer in the adult industry.
A full clown costume, plus red nose (the claimant was a professional clown, so this was work-related clothing).
Q: Caravanning is a popular leisure pursuit among the “young at heart”, but is it possible to claim your caravan as a tax deduction?
A: Surprisingly, the answer might be yes. One client who travelled extensively for work decided to buy a caravan to provide overnight accommodation while working away, rather than paying for a hotel room every night. From a tax point of view, that stacks up to be deductible. But if you are in the same situation and also use the caravan for holidays, you’ll need to apportion the deduction between work use and private use.
Q: What should someone do if they are unsure about what they can or can’t claim?
A: Talk to a tax agent. More than half (64 per cent) of Australian taxpayers experience a level of confusion to what they can and can’t claim at tax time. Getting help from an agent will take away the stress and worry of either claiming something you’re not entitled to, or missing out on something you are entitled to.
Q: What can be some of the ramifications of attempting to claim something you shouldn’t?
A: If you claim something you’re not entitled to, you may find yourself receiving a “please explain” letter from the ATO, asking you to justify your claim and/or provide proof that you actually incurred the expense.
If you can’t satisfactorily respond, you could find your claim disallowed and that could lead to extra tax, interest and penalties of up to 75 per cent of the tax you avoided.
The ATO could also look to audit the rest of your return to hunt for further discrepancies.
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