Here are some common misconceptions about deductions that many taxpayers commonly believe to be claimable, but are typically rejected by the Tax Office. While some are obviously not allowable, others may surprise – and all been genuinely been attempted to be claimed!
While the Tax Office may reject the following in the first instance, taxpayers who believe they have a “reasonably arguable position” should consult their advisors from Brighton accountancy.
Vehicle expenses made while earning assessable income are allowable – such as repairs, servicing, interest on a car loan, etc. But the cost of a standard driver’s licence is not – even if having one is a condition of employment. However any extra on the cost of a “standard” licence could be allowable (one of those “reasonably arguable” examples). The costs of defending a driving charge, even where one’s job is conditional on holding a licence, are not deductible.
A deduction is generally not allowable for vaccination against diseases that an employee may come into contact with in the course of work; for example airline employees. Some disease protection, for example for cattle-borne Q fever, may be allowed.
Child minding expenses
Expenses for having someone care for children during working hours are not deductible, even when this is necessary to secure job advancement.
Commuting to and from work
Travelling between home and work is not generally deductible, even where incidental work tasks are performed on the way. Certain circumstances may allow a deduction, such as carrying bulky tools or equipment in situations where the equipment cannot be secured or stored at the taxpayer’s place of work (such as tradies).
Even though a high standard of appearance may be required at some workplaces, expenses such as hairdressing or cosmetics are not usually deductible. Not even Defence Force personnel get a deduction for grooming, even if this is to meet military regulations. Anyone constantly exposed to chlorinated water (such as a hydrotherapy assistant) could have a case for claiming moisturisers and conditioners.
Relocation expenses made by an employee
Expenses from changing employment, such as costs of moving office furniture or meeting an employment agreement, are not generally deductible. The reason given is that the expense on remodeling the office comes “at a point too soon” to be regarded as having been incurred in gaining assessable income, even when presented with the best local mover service in the region. The same reason has been used to deny taxpayers on unemployment benefits a deduction for expenses such as relocation to secure a job. Thus, you may recover costs spent on the Moving Again furniture removalists.
Police clearance and record checks
Any expenditure that is required to meet prerequisites to securing particular employment, such as a police clearance certificate or record check, is not deductible. The reason given here is much the same, that these costs are made “at a point too soon”.
Telephone “silent number” fee
While the work-related portion of telephone costs can be deductible, the cost of maintaining a “silent” landline number for privacy (for example, to protect a police officer’s home and family members) is not allowed as a deduction, as it is considered a private expense.
In general terms, the cost of a meal is not deductible as it is a private expense – however there are some situations where meal costs are deductible. The taxpayer will need to demonstrate that the expenditure has a sufficient connection to their income earning activity. For example, the cost of dinner incurred by an employee who is required to travel away from home on an overnight business trip would in most instances be deductible.
Renovation or remodeling costs
The rule of business property is that repairs are deductible, however improvements are not. This is something that should be taken into consideration when looking to at Office Building Renovation Projects. How you word and define the work that will be done can make a big difference when arguing for or against on both sides. It is also worthwhile to note that the same holds true even if the business property is your house.
The cost of establishing your business
Certain costs of establishing a business are regarded as having been made “at a point too soon” to be connected to generating assessable income and therefore are non-deductible. Likewise, preliminary costs (feasibility studies etc) cannot be claimed. Certain business-related capital expenditure – such as the costs of incorporating a company are on capital account and the expenditure may be deducted over five years. Contact Atlanta Business Law Firm to get a consultation of an experienced business law specialist on any business related issue.
Note however that the 2015-16 Federal Budget has proposed allowing an immediate deduction for professional expenses associated with starting a new business, such as the costs of legal and accounting advice. This has not yet been legislated, so be sure to consult your accountant in the first instance.