Tax time is only weeks away, which means many Aussies will be scrambling to find receipts and make last-minute purchases to claim back on their 2022 tax returns.
But, when it comes to deductions, not all expenses are created equal so, it's important to understand what you can and can't claim.
Perhaps you’re considering claiming that parking fine you received while you were parked outside the office? Or the time you commuted without a mask on?
Now, you’ve been hit with a fine. But, can you claim it on tax?
The answer is a clear and decisive no, according to H&R Block tax communications director Mark Chapman.
“Fines are not tax deductible,” Chapman told Yahoo Finance.
He explained that fines could include parking and speeding fines or penalties, such as a fine you receive for speeding on your way to work.
“The tax act specifically targets fines, labelling fines and penalties imposed under an Australian or foreign law, or ordered by the courts, as non-deductible” Chapman said.
The ATO website clearly states: “You can't claim a deduction for penalties we impose.”
What happens if you try to claim a fine?
If you try to claim a fine back on tax, you could actually end up paying more by incurring another fine.
The reason for this is the ATO fines Australians who make misleading claims, with larger fines for those who do so deliberately.
In fact, if you claim a fine as a workplace expense, or “intentionally disregard” the law in your tax return by making a misleading statement, you’ll be eligible for a fine of up to 75 per cent of the shortfall amount.
Even if you weren’t to receive any tax benefit by making the dodgy claim, you’re still up for a penalty.
If you’re found to have failed to “take reasonable care”, then you’re up for a fine of $4,440.
“Generally, you fail to take reasonable care if you make a false or misleading statement that a reasonable person in the same circumstances would not have made,” the ATO said.
Fines up to $13,320 for misleading statements on tax return
The penalty for making misleading statements increases to a whopping $8,880 if you’re found to have demonstrated “recklessness”.
“You are reckless if a reasonable person in your circumstances would have been aware that there was a real risk that the statement was false or misleading, and you disregarded or showed indifference to that risk,” the ATO said.
If the ATO decides you have shown “intentional disregard”, then the fine could be as much as $13,320.
“You intentionally disregard the law if you are fully aware that a statement is false or misleading, and you choose to make it anyway with the intention of bringing about certain results - for example, underpaying tax or over-claiming an entitlement.”
So, if you're thinking of claiming a fine on your tax this EOFY, think again.