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You can’t claim that: Top 10 tax traps

tax trap, can't claim, tax advice

Everyone has tax advice, but some advice, like that given by shop assistants, probably should be taken with a grain of salt.

For starters, there’s no such thing as a “standard deduction”, the Australian Taxation Office’s (ATO) assistant commissioner Kath Anderson said.

It’s a common misconception that everyone is entitled to a $150 deduction for laundry, 5,000 kilometres for cars and $300 for work-related expenses, Ms Anderson said. But it’s simply not correct.

“While it’s true that you don’t need to keep detailed receipts for deductions up to those amounts, it’s not an automatic entitlement.


“You still need to meet the three golden rules – you must have spent the money yourself; it must be directly related to earning your income; and you must be able to show us how you calculated your claim," she said.

Further, falling into a trap like this can be an expensive mistake, the ATO said.

Top 10 myths

1.       I don’t need a receipt, my bank or credit card statement is good enough


Around half of the adjustments we make are because taxpayers didn’t keep proper records and therefore they could not demonstrate that they spent the money, what it was spent on and how the expenditure links to earning their income,” Ms Anderson said.

“A credit card statement will not usually have enough detail to support the claim.”

2.       My makeup contains sunscreen, so I can claim it because I work outside

Nice try, but for most workers there isn’t a link to these purchases and earning an income.

“There are only a handful of taxpayers with special circumstances who can claim things like gym memberships or makeup containing sunscreen,” she said.

3.       I’m claiming my gym expenses because I need to be fit for work

Again, no.

Unless you’re in special operations in the Australian Defence Force you probably won’t get away with this one.

4.       My boss wants me to wear black, so I’m claiming my work clothes

The ATO won’t fall for that, Ms Anderson said.

Unless you wear a distinct uniform, or occupation specific clothing, this claim won’t pass the test.

5.       I can claim travel expenses for this holiday because I also worked

"One taxpayer recently took his family on a skiing holiday and claimed it was deductible because he attended a conference for a few days while he was there. He wasn’t very happy when $23,000 of his $25,000 claim was disallowed.”

6.       I need to stay up-to-date for work, so I’m claiming Netflix

According to the assistant commissioner, the growing number of taxpayers claiming their Netflix or Foxtel subscription due to work-from-home situations is a concern.

The ATO said taxpayers need to apportion and identify the specific portion of expense that relates to work in order to receive the deduction.

7.       I’m claiming my weekly travel expenses because I need to get to work to earn a living

“For most of us, home to work travel is private since your boss doesn’t pay you until you get to work. There are limited circumstances where someone who has to transport bulky equipment can make a claim,” the ATO said.

8.       My phone plan is capped, so I’m going to claim personal and work phone calls

This won’t fly unless you use your phone exclusively for work. Otherwise, taxpayers can only claim the work-related portion.

9.       My agent will take responsibility for my claims

That’s a myth, Ms Anderson said.

“Whether you prepare your own return or you use an agent, you are ultimately responsible for ensuring your claims are correct," she said.

10.   I’m going to claim the “standard deduction”

There’s no such thing.

“Taxpayers listen to advice from many sources, including tax agents, colleagues, family and friends, and even helpful shop assistants. While some advice is correct, some isn’t and it’s leading to mistakes and errors that can be costly, Ms Anderson said.

You can’t claim that: Top 10 tax traps
tax trap, can't claim, tax advice
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