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Unusual tax claims ATO approves that Aussies may not have considered for return boost

The Australian Taxation Office will crack down on incorrect claims, but there are legitimate arguments for some strange deductions.

Either you or your accountant will know the main tax deductions to be made. But an expert has lifted the lid on some more unusual claims that have been approved by the Australian Taxation Office (ATO).

Mark Chapman, director of tax communications for H&R Block, told Yahoo Finance workers need to remember the "basic rule" that: "If you've incurred an expense as part of your job, you can claim it." That means for tradies you can claim tools, or a taxi driver can get back some cash on petrol.

But, outside the "straightforward and obvious", H&R have seen successful claims on pet dogs, hair care, caravans and even garden gnomes.

A tax expert has revealed some of the wilder deductions Aussies have gotten past the ATO, and why.
A tax expert has revealed some of the wilder deductions Aussies have gotten past the ATO, and why. (Yahoo Finance Australia)

"With tax being something of a grey area for many, it is inevitable that some of the claims tax specialists encounter aren’t always of the typical variety," Chapman told Yahoo Finance.

Chapman said in "very limited circumstances", yes.

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You can claim, both for the cost of acquiring the animal (the cost is depreciated over several years) and for the costs of keeping it (food, vet bills)," he said.

"The two most common scenarios where the cost of a dog is tax deductible are farming (where an animal might be used to round up sheep, for instance) and security (where the cost of a guard dog to patrol business premises might be allowable)."

If you own a rental property you can claim a range of expenses, as long as a tenant hasn't covered them.

These include (for a full list check here):

  • Advertising for tenants

  • Body corporate fees

  • Council rates, water charges, land tax

  • Cleaning

  • Gardening

  • Pest control

But did you know, Chapman said you can also claim a deduction for "expenses incurred to improve your property’s ‘street appeal’."

"For example, some clients have successfully claimed garden gnomes in respect of their rental property," he said.

"But make sure the gnomes are actually for your rental property; if they turn up in the garden of your family home, they are not deductible."

Can I claim on a caravan?

Caravaning is a popular activity for many Australians and Champman said there are "surprisingly" deductions Australians can make depending on your work and activity.

"One taxpayer who travelled extensively for work decided to buy a caravan to provide overnight accommodation whilst working away, rather than paying for a hotel room every night," he said.

"That was deductible. But if you are in the same situation and also use the caravan for holidays, you’ll need to apportion the deduction between work use and private use."

Chapman said one of the more unusual claims he's seen go through was for a clown costume. It does make sense considering the man was a professional clown and could be something performing artists can take note of.

"The whole costume was allowable, including the red nose, as a work-related clothing claim," he said.

"Similarly, the professional sword swallower was able to claim the ceremonial swords used in his act and professional musicians can claim for the cost of music lessons and musical instruments."

The tax expert said various claims have been made over the years, including a "well-known fashion model" who argued the cosmetic procedures she'd had over the years was done to "maintain her career".

She argued there was a clear link between the cosmetic surgery and deriving her income," he said.

"It’s an argument that seems superficially compelling but it’s not one the ATO would agree with; so far as they are concerned, medical procedures are rarely if ever tax-deductible, no matter what the reason."

Adult entertainers can claim "all manner of interesting deductions".

But Chapman said, unlike in the US, breast augmentation being claimed under them being "tools of the trade" was "not an argument that would find favour here".

Some of the claims they can successfully make include:

  • Dance lessons

  • Hair care

  • Oils

  • Lingerie

  • Costumes

  • Toys

Tax claims can be made from July 1. Here are some tips to get your return back faster, the common claims the ATO are targeting and some details about how the new stage 3 tax cuts will impact you.