$20k for ‘raising twins’, dental expenses for a ‘nice smile’ and a Lego set among claims rejected by ATO

As part of their annual tax refund, around 700,000 taxpayers claimed almost $2 billion of ‘other’ expenses including non-allowable items such as dental costs, child care, private vehicles and even Lego sets. 

One particularly charitable taxpayer tried to claim for a car purchased as a gift for their mother. While the ATO appreciated the sentiment, the claim was rejected. 

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.” 

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. While one parent tried to claim back $20,000 for raising twins.The ATO explained to these taxpayers that these are unacceptable deductions and disallowed these claims in full. 

So what is this ‘other’ deductions section?

‘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.” 

Tips to claim an ‘other’ deduction:

  • the expenses must be directly related to earning income 
  • 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 

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