Denied: The five most outrageous tax expense claims

Lego sets and a wedding reception are among the most outrageous expense claims filed with the tax office last financial year.

Almost $2 billion in ‘other’ expenses were claimed by almost 700,000 taxpayers last year, and while many Aussies got it right, some particularly creative taxpayers had their claims disallowed.

A systemic review of claims has yielded some absolute gems, including a taxpayer who claimed lego sets they bought for their children as gifts.

A couple of others claimed their dental expenses — after all, a good smile is essential to finding a job, right? Maybe, but not on the public purse. 

“These claims add up to a lot of money. If the deduction isn’t directly related to earning income, we can’t allow it,” assistant commissioner Karen Foat said in a statement circulated Tuesday.

“Personal gifts don’t qualify, and it’s not okay to ask Australian taxpayers to subsidise presents.”

A bigger group of taxpayers attempted to claim the purchase of a new car for private use. One taxpayer explained his vehicle purchase was charitable: a gift for his mother.

“While the ATO appreciated the sentiment, unfortunately, we were required to disallow the claim,” the tax office said.

The 5 ‘most outrageous’ expense claims 

1. Lego sets and other sporting equipment. This included membership fees related to children’s sporting activities.
2. Vehicles, many of which resulted in claims in excess of $20,000.
3. Child support. One taxpayer claimed “the cost of raising twins”, which is undoubtedly a financial strain, but not an allowable expense.
4. Medical expenses, which are classified as private expenses.
5. Weddings. One taxpayer tried claiming their wedding reception. Claim denied.

‘Other’ deductions are for expenses incurred in the process of earning income which doesn’t appear elsewhere on tax returns, typically used for income protection and sickness insurance premiums.

But the ATO review has found taxpayers clearly don’t understand the intricacies of this, or at least aren’t following the rules, because claims for private expenses ranging from child support payments to private school fees were all claimed and subsequently disallowed.

“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,” Foat said.

The ATO advises expenses need to be “directly related” to earning income and receipts or other records of an expense need to be provided. Claims related to employment should be lodged under work-related expenses.

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