Do your deductions meet the ‘pub test’?

As we roll around to the busy tax season, it is important to be reminded that work-related expenses must have a close connection to your income-earning activities. This should be backed up with records such as a proper tax receipt (not an eftpos machine receipt) or invoice.
 
The Australian Taxation Office has detailed its priorities for the 2025 tax period and noted below are some of the tax deduction attempts it has seen over the years.

“Outrageous” & misunderstood deduction attempts include:

• A mechanic tried to claim an air fryer, microwave, two vacuum cleaners, a TV, a gaming console, and gaming accessories as work-related – Denied by the ATO
  
• A truck driver tried to claim swimwear based on the reasoning that it was hot, while they had stopped in transit and wanted to go for a swim - Denied by the ATO
• A manager in the fashion industry attempted to claim over $10,000 in luxury-branded clothing and accessories to be “well presented at work” and to attend events, dinners, and functions – Denied by the ATO
• A taxpayer tried to claim a family trip to a tropical island - Denied by the ATO
• Another taxpayer tried to claim a luxury yacht “because they might have some business to do on the islands" - Denied by the ATO
• Travel to and from work - Denied by the ATO
• Childcare costs – these are of a personal nature and will be denied by the ATO

 
Don’t just claim your expenses and cross your fingers hoping for the best, as penalties and interest may apply. The ATO doesn’t like fraudulent claims, and they will make sure you know how serious they are. It is not worth the risk.
 
The ATO priorities for this year surround frequent errors, including:

• work-related expenses
• working from home deductions (records need to be kept proving this) – either fixed rate method of $0.70 per hour or actual cost method with all work-related records to kept and provided
• income from multiple income sources, such as side hustles from ride sourcing services or selling services via an app

 
If you are unsure if you can claim an expense, please contact us. We're always here to help! 😊