In 2014, a Sydney man had to pay a hefty penalty after the ATO discovered he was falsely claiming thousands of dollars on work related expenses.

If you push too hard with deductions the taxman will get you.

This guy worked as a salesperson and under the conditions of his employment he was able to work from home. He was advised by a Registered Tax Agent.

The dispute arose out of an audit of his tax affairs triggered by his 2010 tax return in which he declared a taxable income of $21,377, and claimed deductible items to the value of $97,162.

The ATO disallowed various tax deductions for the 2011 and 2012 financial years.

The tax office also imposed a penalty on the basis that he or his agent had “failed to take reasonable care or comply with tax law when claiming work related expenses”.

The sales person disputed this and took the matter to the Administrative Appeals Tribunal.

Here are examples of some of the expenses he tried to claim deductions for:

• Thousands of dollars for secretarial services completed by his son. (His son was around 7-years-old at the time)
• Thousands of dollars of groceries as work related expenses (The groceries included cheese in a can and 39 packets of Monte Carlo biscuits.
• Clothing, rubber soled shoes, dry cleaning, sunglasses, broad rimmed hat and sunscreen (just to name a few!)
• Home office expenses
• Other work related expenses

To read the full rulings click on the link below.

So, what are the deductions you can claim?

(Source: ATO, 14 March, 2016)

When completing your tax return, you’re entitled to claim deductions for some expenses, most of which are directly related to earning your income.

To claim a work-related deduction:

• you must have spent the money yourself and weren’t reimbursed
• it must be related to your job
• you must have a record to prove it (there are some limited exceptions)

If the expense was for both work and private purposes, you can only claim a deduction for the work-related portion.

Follow the links below for specific deductions you can claim:

• vehicle and travel expenses, including travel between work and home

• clothing, laundry and dry-cleaning expenses

• gifts and donations

• home office expenses

• interest, dividend and other investment income deductions

• self-education expenses

• tools, equipment and other equipment

• other deductions

The staff at McAdam Siemon will get your deductions right because we have the checks and balances in place.