Tax Deductions That Are Not Allowed

Over the past two years, there’s been an increase in ATO audits of individual tax returns, resulting mostly from incorrect tax deductions.  The ATO plays a significant role in educating taxpayers on getting their tax deductions right, and as such they’re on the lookout for red flags that indicate people may be doing the wrong thing. 

For example, the ATO recently published information relating to audits sparked by data matching activities.  In this case, the ATO used data matching to find anomalies in personal income versus ‘lifestyle’ costs.   As a result, we strongly recommend that you report all income and maintain appropriate records for tax deductions to ensure you avoid the inconvenience and time associated with responding to an ATO audit.

Semmens & Co. have compiled our thoughts on smart and legitimate strategies every CEO, CFO and Director should be aware of to maximize tax benefits and reduce your tax bill in our new e-book Top 9 Tax Tips That Could Save You Thousands. You can learn more about strategies one and two from the e-book by registering to attend our webinar here.

In order to avoid being flagged for an audit, below is a list of deductions an individual cant usually claim on your tax return:

  • Travel between home and work, which is considered private travel.
  • Car expenses, unless you are transporting bulky tools or equipment that your employer requires you to use and, you cannot leave it at work.
  • Car expenses for a vehicle that has been salary sacrificed.
  • Meal expenses unless you were required to work away from home overnight.
  • Private travel or the private portion of a work-related travel/trip.
  • Everyday clothes bought to wear for work.  It is important to note that if you are an office worker, a suit, white shirt and black pants may be your office- wear but cannot be claimed, even if your employer requires you to wear them. This also includes the cost of laundering said office-wear.
  • Higher Education Loan Program and any contributions charged through the HELP scheme.
  • Self-education where the study cannot be directly related to your current employment.
  • Phone or internet costs for your private use.
  • Tools and equipment that cost over $300 cannot be claimed but they can be depreciated over a number of years.

Have a query about tax deductions?  If you have any questions or need advice and clarity specific to your situation, feel free to contact Semmens & Co on 03 8320 0320 for a free consultation.

If you’re looking for more information on how to maximize tax benefits for your business, download our e-book Top 9 Tax Tips That Could Save You Thousands or, learn more about these strategies by registering to attend our webinar.

Thoughts From Our Principals

Mark Semmens

Mark is a Chartered Accountant with a wealth of experience in accounting and taxation. Mark is a Member of Chartered Accountants Australia and New Zealand, the Tax Practitioners Board and the National Tax and Accountants Association.

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Daniela Semmens

Daniela Semmens is a Co-Director of Semmens & Co. and joined the company as General Manager in 2017. Daniela is an Affiliate Member of Chartered Accountants Australia and New Zealand and also a Member of the Australian Institute of Project Management.

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