5 Tax Deductions You Shouldn’t Attempt To Claim

By Grace Ormsby

July 31 2019
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A statement from the Tax Office said that nearly 700,000 taxpayers claimed almost $2 billion in “other expenses” last year, with some of these considered by the ATO as non-allowable.

Assistant commissioner Karen Foat said that the systematic review of claims had found and disallowed some very unusual expenses and clarified “if the tax deduction isn’t directly related to earning income, we can’t allow it”.

The ATO clarified that the “other” tax deductions section of an individual’s tax return is for expenses incurred in earning income that doesn’t fit anywhere else on the return, and includes items such as income protection and sickness insurance premiums.

Some taxpayers have been called out for incorrectly claiming a range of private expenses such as child support payments, private school fees, health insurance costs and medical expenses.

Where people make genuine mistakes, Ms Foat said the ATO will simply disallow the claim.

“But when people are deliberately making dishonest claims, particularly for large sums, we will disallow the claim and may impose a penalty,” she highlighted.

“We want people to understand on what can office workers claim on tax and receive every dollar they are entitled to. But making incorrect claims that are personal or private take funding away from providing essential community services, and that’s not OK.”

Here is the ATO’s list of most outrageous claims:

1. Lego sets

One taxpayer attempted to claim the cost of the children’s Lego kits purchased throughout the year, with the ATO noting this claim as being disallowed in full.

2. Vehicles

Many taxpayers tried to claim purchases for brand-new cars, the ATO said.

These claims, in excess of $20,000 each, were disallowed as purchase of a private vehicle is not an allowable tax deduction.

The ATO also called out a “particularly charitable taxpayer” who tried to claim for a car expenses as a gift for their mother.

The Tax Office’s response? “While the ATO appreciated the sentiment, unfortunately, we were required to disallow the claim.”

3. Cost of raising children

One taxpayer made a claim for “the cost of raising twins”, while another tried to claim the cost of “raising three children”.

A third person was obviously caught unaware that kids cost money, having simply stated “newborn baby expensive” on their claim.

The ATO said it had to explain to each of these taxpayers that raising children is not an acceptable tax deduction, and resulted in disallowing all related claims in full.

4. Medical expenses

According to the ATO, many taxpayers used “other deductions” to make claims for dental or medical care.

Noting such expenses as private expenses, the Tax Office said it disallowed medical and dental claims in full.

5. Wedding reception

On this oddity, the ATO simply wrote that “one taxpayer decided to claim the cost of their wedding reception”.

“We disallowed the claim in full.”

If you want to learn more about some of the weirdest and wackiest tax return deduction claims industry experts have seen, read here.

But there are also some of the people who wants to claim a tax deduction and quite reasonable such as work related expenses, home office expenses, travel expenses but still depends on situations.

nestegg has previously considered the question: Are you claiming all you are entitled to this tax time?

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About the author

Grace Ormsby

Grace is a journalist on Momentum Media's nestegg. She enjoys being able to provide easy to digest information and practical tips for Australians with regard to their wealth, as well as having a platform on which to engage leading experts and commentators and leverage their insight.

About the author

Grace Ormsby

Grace is a journalist on Momentum Media's nestegg. She enjoys being able to provide easy to digest information and practical tips for Australians with regard to their wealth, as well as having a platform on which to engage leading experts and commentators and leverage their insight.

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