In a statement on Tuesday (30 July), the ATO said that just under 700,000 Australians claimed deductions under the “other” category last financial year, worth just under $2 billion.
But many of these claims have been rejected by the Tax Office.
“These claims add up to a lot of money. If the deduction isn’t directly related to earning income, we can’t allow it,” said assistant commissioner Karen Foat.
According to Ms Foat, more than one person tried to claim their dental bills.
“A couple of taxpayers claimed dental expenses, believing a nice smile was essential to finding a job, and was therefore deductible. It isn’t and their claims were disallowed,” she said, adding that medical costs are a personal expense and not eligible for a deduction.
“Another taxpayer claimed the Lego sets they bought as gifts for their children. Unsurprisingly, this claim was disallowed. Personal gifts don’t qualify, and it’s not OK to ask Australian taxpayers to subsidise presents.”
Lego wasn’t the only child-related cost for which Australians attempted to claim deductions.
Childcare also stood out as a big no-no, with the ATO stating that one taxpayer tried to claim “the cost of raising twins” and another “the cost of raising three children”, while a third simply stated “newborn baby [is] expensive” in trying to justify their claim.
School fees and uniforms as well as childcare were also denied.
“We explained to these taxpayers that these are unacceptable deductions and disallowed these claims in full,” the ATO said.
A common trip-up in terms of deductions is vehicle-related expenses. But the ATO revealed that multiple taxpayers had tried to write-off the entire purchase price of a new car.
“These claims, in excess of $20,000 each, were disallowed, as purchasing a private vehicle is not an allowable deduction,” it said.
“One particularly charitable taxpayer tried to claim for a car purchased as a gift for their mother. While the ATO appreciated the sentiment, unfortunately, we were required to disallow the claim.”
Perhaps, the biggest surprise was the finding that one Australian tried to claim the entire cost of their wedding reception as a tax deduction.
Unsurprisingly, the ATO denied the claim in full.
Penalties for wrongful claims
The ATO revealed the unlikely tax claims in a bid to highlight the fact that as well as having claims denied, penalties also apply for making deductions that are not “reasonably arguable”.
And no — tax penalties are also not eligible for a tax deduction.
The ATO has previously revealed other dodgy tax claims have included travel to and from work and European holidays.
Meanwhile, in June this year, a Queensland chef was convicted in court of claiming false work-related expenses amounting to more than $45,000.
More information on what is acceptable under the “other deductions” category can be found on the ATO website.