Yahoo Finance Claiming fines on tax? You could cop a $13.2k penalty
So you’ve been a bit bad this year.
Maybe you left your car in a one-hour parking spot for two hours, or you hopped on a bus without a face mask.
Now, you’ve got a fine. Can you claim it on tax?
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According H&R Block tax communications director Mark Chapman, the answer is clear and decisive: no.
“Fines are not tax deductible,” he told Yahoo Finance.
“Fines can include parking and speeding fines or penalties, for example, 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.”
Similarly, if the ATO itself imposes a fine for late or misleading claims, this penalty is not tax deductible.
“The answer is no.”
What happens if I try to claim a fine on tax?
If you try, you could actually worsen your situation by incurring another fine.
That’s because the ATO fines people who make misleading claims, with higher fines for those who deliberately did so.
In fact, if you claimed a fine as a workplace expense, or made another misleading statement, you’d be eligible for a fine of up to 75 per cent of the tax you would have saved if that fine had been successfully deducted.
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.
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“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.
But that increases to a huge $8,880 if you’re found to have been reckless.
“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.”
Then, if the ATO decides you have shown “intentional disregard”, then the fine could be as huge as $13,200.
“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 long story short, if you’ve copped a fine this year, just pay it.
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