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Trying to get your tax paperwork ready? Don’t waste time on these deductions!

Many tax payers are rushing to gather together receipts for some deductions they hope they can claim.  Naturally, most taxpayers are keen to maximise their deductions. Many waste time looking to claim for expenses that are often knocked back by the Australian Taxation Office (ATO).

To help you save time, listed below are items and costs that a lot of taxpayers commonly believe to be allowable deductions.

It may surprise you to find most are generally not deductible.

Driver’s License

In general, vehicle expenses such as repairs, service maintenance, and interest on a loan, may be claimed as a tax deduction (under certain circumstances). The cost of a driver’s license, even if it’s a condition of employment, is not an allowable deduction.

Vaccinations

Expenses for most vaccinations against diseases a taxpayer may be exposed to in the course of earning their income are generally non-deductible. This applies even to airline employees who may be routinely exposed to various diseases due to the nature of their jobs. However, some specific disease protections, such as the vaccine against cattle-borne Q fever may be allowed by the ATO.

Grooming

Even if an employee is required to maintain a certain standard of appearance for their job or if particular regulations demand it, as is the case for Defence Force personnel, grooming costs such as cosmetics and hairdressing are generally not deductible.

Police Clearance and Record Checks

For some employment roles, a “working with children check” or some other form of Police Clearance are prerequisites. However, the cost incurred to acquire these clearances are not allowable deductions as the expenses are “at a point too soon” to be associated with the particular employment income.

Eviction of a Tenant

Expenses incurred by a rental property owner in taking eviction proceedings against a tenant who has defaulted on rental payments or whose term has expired are not generally tax deductible.

Volunteer Work

There are no available deductions to cover expenses made while doing volunteer work for a charity or a not-for-profit organisation. This means that even the petrol used to drive to areas for volunteer work do not generally qualify for tax deduction.

Real Tax Time 2016 Examples from ATO – Beware of making dubious expense claims

The examples below are some actual claims that the ATO deemed to be unacceptable and which it has consequently denied.

Case 1

A railway guard claimed work-related car expenses worth $3,700. He claimed for the cost of travel between home and his workplace. He indicated that this cost was related to carrying bulky tools such as large instruction manuals and safety equipment.

However, the ATO were advised by the employer that the equipment could be securely stored on their premises. The taxpayer’s car expense claims were disallowed because the transport of the tools was unnecessary as the equipment could be safely stored at work, and to carry them was a personal choice, not a requirement of the employer.

Case 2

A medical professional claimed a tax deduction for attending a conference in America and provided an invoice for the expenses. But after checking, the ATO found that the taxpayer was still in Australia at the time of the conference. The claims were disallowed and the taxpayer received a substantial penalty.

Case 3

A taxpayer claimed deductions for car expenses using the logbook method. The Tax Office found that the taxpayer recorded kilometres in the logbook on days when there was no record of the car travelling on certain toll roads; further inquiry showed that the taxpayer was out of the country at that time. The claims were disallowed by the ATO.

Need help getting your records together? Contact our Tax Accountant team at McKinley Plowman on (08)9301 2200 or use our 2016 Personal Income Tax Return Questionnaire that may be accessed here.

written by:

McKinley Plowman