The ATO has released its annual list of crazy claims – those that imaginative taxpayers have tried to sneak through while the Commissioner wasn’t looking.

Over the years there’s been some crackers – an IBM salesman claiming $100,000 for meals on family holidays, a wine expert claiming $9,000 to get boozed on a European holiday, and a medical professional claiming costs for an American conference but never leaving Australia.

But the latest round takes it to an almost humorous level. First there was a mechanic who claimed an air fryer, a television, a gaming console and vacuum cleaners (not just one, but two for this immaculate mechanic). 

Then there’s the truckie who thought his budgie smugglers might be tax deductible because he travelled in hot regions and sometimes stopped for a swim. That’s definitely not a 10-4 good buddy.

Lastly was a fashion industry manager claiming $10,000 in luxury branded clothing to attend work, dinner and functions. Sounds like a load of haberdashery.

A recent survey of tax agents conducted by Chartered Accountants ANZ revealed some more crackpot claims made by their clients.

There was a technology retail store worker, who inventively called himself an ‘entertainment consultant’ and tried to claim a deduction for his video games and streaming services. That’s a showstopper. Another taxpayer wanted to claim monthly hair salon visits because their hair grew during work hours. There’s a fuzzy logic, but it’s unlikely to cut it with the ATO.

How about a rental property owner who thought their gym fees might be deductible because they needed to stay fit to renovate their property? Not the strongest argument. Or a business owner claiming the cost of a luxury yacht because they might have some business to do on the islands. Batten down the hatches captain, there’s an audit ahead.

At FAJ we don’t often see claims quite that crazy, but we do get pressure from time to time to miraculously find a deduction that just doesn’t exist. Often, it’s because a mate of a mate is boasting of a bigger tax refund.

The ATO has sophisticated tools to detect and investigate anomalies, including data matching against information from many other agencies. It’s very likely that they’ll notice an oddity on your tax return and investigate further.

Tax office audits are uncomfortable, inconvenient and costly, even when they don’t uncover any wrongdoing, and should be avoided at all costs. ATO officers tend to be sceptical and slightly unhumorous characters who take a no-nonsense, unemotional, evidence-based approach to their investigations. 

At the end of the day, if your claim sounds like the start of a stand-up routine, chances are the ATO won’t be laughing.  

by MARK DOUGLAS
FCPA
Managing Partner of Francis A Jones
www.faj.com.au