Show download pdf controls
  • No smiles as dental expenses rejected

    The Australian Taxation Office (ATO) has published some of the most unusual claims that they disallowed last financial year.

    Nearly 700,000 taxpayers claimed almost $2 billion of ‘other’ expenses including non-allowable items such as dental costs, child care, and even Lego sets.

    Assistant Commissioner Karen Foat said that a systematic review of claims had found, and disallowed, some very unusual expenses. “These claims add up to a lot of money. If the deduction isn’t directly related to earning income, we can’t allow it.”

    “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.”

    “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 okay to ask Australian taxpayers to subsidise presents.”

    ‘Other’ deductions section of the tax return is for expenses incurred in earning income that don’t appear elsewhere on the return – such as income protection and sickness insurance premiums. However, the ATO review found that some taxpayers were incorrectly claiming a range of private expenses such as child support payments, private school fees, health insurance costs and medical expenses, all of which are not allowable.

    “Where people make genuine mistakes, we 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,” Ms Foat said.

    “We want people to understand what expenses they can claim 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.”

    Remember, in order to claim an ‘other’ deduction, the expenses must be directly related to earning income and you need to have a receipt or record of the expense. If your expense relates to your employment, it should be claimed at the work related expenses section of the return.

    To find out more about what deductions you can claim this tax time, visit: ato.gov.au/individuals/mytax/2019/in-detail/other-deductions/

    To find out more about the penalties for making false or misleading statements, visit: ato.gov.au/penalty

    The ATO myDeductions app makes it easier and more convenient to keep your expense and income records in one place. For more information visit: ato.gov.au/mydeductions.

    Top 5 most outrageous claims

    1. Lego sets

    One taxpayer claimed the cost of the children’s Lego kits purchased throughout the year. Others claimed for sporting equipment of membership fees for their child athletes.

    We disallowed these claims in full.

    1. Vehicles

    Many taxpayers tried to claim the purchase of a brand new car. These claims, in excess of $20,000 each, were disallowed as purchasing a private vehicle is not an allowable deduction.

    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.

    1. Cost of raising Children or child support

    One taxpayer made a claim for ‘the cost of raising twins’, while another claimed for the ‘cost of raising three children’.

    One taxpayer was obviously shocked at the cost of having children, simply stating ‘New born baby expensive’ when making their claim.

    Other taxpayers claimed school uniforms, before school care, and school fees and expenses.

    We explained to these taxpayers that these are unacceptable deductions and disallowed these claims in full.

    1. Medical expenses

    Many taxpayers used ’other deductions’ to make claims for dental or medical care.

    Unfortunately, these expenses are not a deduction as they are a private expense. We disallowed these claims in full.

    1. Wedding reception

    One taxpayer decided to claim the cost of their wedding reception.

    We disallowed the claim in full.

    Last modified: 30 Jul 2019QC 59786