Every year, Australians claim approximately $20 billion in work-related deductions on their tax returns. From moisturizer to lingerie, here are 7 weird tax deductions that you can potentially claim in your tax return. Maybe you could claim one of these unusual tax deductions on your own tax return?
Number 7: Rapid Antigen Tests
Remember when there was a nationwide shortage of Rapid Antigen Tests and they were being sold for $50 each? That was a pretty dark time but there is some good news because you can now get back some of that money that you spent on RATs.
Earlier in 2022, the tax legislation was changed to add this section, which allows you to claim a deduction for COVID-19 testing expenses. To legally claim this deduction or any of the other deductions in this article, you need to meet what the ATO calls the three golden rules.
The first rule is that you must have spent the money yourself, which means that you can’t claim a deduction if your employer reimbursed you for the cost. The second rule is that ‘the expense must directly relate to earning your income.’ So if you took a test to see if you could go to work, that would satisfy these criteria. The third rule is that you must have a record to prove the expense. A receipt is your best bet, but a bank or credit card statement will also be acceptable.
Since there are multiple tests in a box, if you ended up using some of the tests for a private purpose (such as testing yourself before going to a party or a football game), then you won’t be able to claim a deduction for the whole box. Only the tests that were used for the work-related purpose can be claimed.
Number 6: Face masks and sanitizer
Still, on the subject of COVID, the cost of face masks and sanitizer can be claimed as a deduction if you meet the three golden rules. According to the ATO, these items will directly relate to earning your income, which is the second golden rule, if your work requires you to be in close proximity with other people.
This will include most Australians who are working in the medical, airline, hairdressing, retail, and restaurant industries. Sanitiser will also be available as a deduction for cleaners even if they don’t work in close proximity with other people.
Number 5: Moisturizer
Protective items are a major category of work-related deductions. A well-known one that you can claim in Australia is sunscreen, which you can claim if you regularly work outdoors. This includes everyone from gardeners to roadworkers to builders to couriers to delivery workers. A much less well-known deduction is a moisturizer, which is specifically available as a deduction for pilots and flight attendants.
This is because aircraft cabins tend to have low air pressure and are kept at a humidity level of 20 percent, which, by the way, is 5 percent lower than the relative humidity of the Sahara desert. So pilots and flight attendants need moisturizers to help them to deal with working in these abnormally dry conditions. Pretty cool, huh?
Ok, so that one was really occupation-specific, but that’s how most deductions are. Everyone’s work environment is different, so some occupations get to claim things that others can’t. But let me give you a pro tip to help you out with understanding what you can claim for your specific line of work.
Go to ato.gov.au and type ‘occupation’ in the search box, click the first link to open up ‘Occupation and industry-specific guides’. Scroll down a bit and you’ll see a table. In the right-hand column, you’ll find summaries of available deductions for all sorts of different occupations. Find the one that applies to you and have a read.
As you can see from page two of this guide for flight attendants, it specifically says: ‘You can claim rehydrating moisturizers and rehydrating hair conditioners used to combat the abnormal drying of skin and hair when working in the pressurized environment of an aircraft.’ This is information that’s coming straight from the ATO so you know you can trust it.
Number 4: Christmas Hampers
OK, things are getting a bit weirder now. Who gets to claim a deduction for Christmas Hampers? Well, if we go back to our table of occupations, scroll down, and click the link for real estate employees, the deductions summary actually has a section on gifts that says that ‘you can claim a deduction for the cost of gifts you buy for work purposes if you are a salesperson or property manager entitled to receive your income from commission’.
So this would include everything from a bottle of whisky, to gift vouchers, to wine, to a pen set, to flowers, and of course, to a Christmas Hamper. The guide goes on to clarify that these deductions are not available to real estate employees who only receive a fixed income and do not earn a commission. The gifts provided also cannot be in the form of entertainment. So tickets to the game are a no-go.
Number 3: Streaming a documentary
The deduction summaries in this table are really good for giving you a good idea of the kinds of deductions that each occupation can claim. But as we’ve seen, each document is only about 2 pages long, so they can’t possibly cover everything. If you want to find the really rare and really obscure deductions, then you’re going to have to dig deeper into the ATO’s website to explore the detailed guides for each occupation, which are all of the links on the left-hand column of this table.
So if you wanted to see the full guide for performing artists, just click on performing artists and you’ll get taken to this page.
Click ‘deductions’ on the left-hand side of the page, scroll down, and you’ll see an entire library of links to common performing artist deductions for you to explore. Let’s go ahead and click ‘research expenses’. The guide tells us that performing artists ‘can claim a deduction for the cost of researching a role or character that they have been employed to play.
For example, the cost of reference material containing information on a character, era or event.’ The ATO then gives us an example below: ‘Barry is cast to play the role of a former Prime Minister in a historical television drama. He buys several biographies of the Prime Minister and streams a documentary series on the Prime Minister’s years in Government.
Barry can claim a deduction for the cost of the biographies and the direct costs of streaming the documentary.’ So there you have it. Streaming a documentary is apparently a deductible expense for some performing artists. So are fencing lessons apparently. Don’t believe me? Just scroll down the page to the next example.
‘Ahmed is a stage actor in a Shakespearean theatre. To improve his performing skills, he enrolls in coaching classes for both fencing and vocal training. Ahmed can claim a deduction for his study expenses because they are directly related to his current employment as a stage actor and will improve his performing skills.’ This is all information that is on the ATO’s website, so it’s completely legit. But man, those are some obscure deductions.
Number 2: Lingerie
This one shouldn’t come as a surprise since I mentioned it at the start of the article. Adult industry workers can legitimately claim lingerie as a deduction for the same reason that a chef can claim their hat. The rules for clothing and uniform expenses are actually the same across all professions. Compulsory uniforms, protective clothing, and occupational-specific clothing are deductible, while conventional clothing is not deductible.
Conventional clothing is just everyday clothing that people wear regardless of their occupation, such as jeans or a business shirt. On the other hand, occupational-specific clothing is something that distinctly identifies a person with a particular profession, like a chef’s hat. It’s not that hard to work out which category lingerie falls under.
The ATO has an example on their website to confirm this: ‘Candice is an employee dancer at an adult entertainment bar. Her employer requires her to wear costumes that are not conventional in nature… not conventional in nature while she is working. Candice can claim a deduction for the cost of buying and cleaning these items as they are occupation-specific.’
Number 1: Dogs
Forget offshore tax evasion, the black economy, and multinational corporations shifting their profits to tax havens. This is (by far) the most unfair aspect of the tax system. The fact that there are people out there who can legally claim a deduction for their dogs when I’m not allowed to do the same is a travesty of justice.
A travesty of justice. I guess my dream of owning a doggo and claiming tax deductions for it will have to wait. Right now, dog expenses are only deductible for security guards who require guard dogs and farmers who use sheepdogs. These occupations can claim the cost of dog food and vet bills, while the cost of the animal itself can be claimed over several years.
There is, of course, a major catch. You’re only supposed to use your dog for work, which unfortunately means you’re not allowed to treat it like as a family pet. Way to go ATO, thank you for sucking all the fun out of my life.
Two key takeaways from this article
I hope you had fun reading this article. While I have to admit that a lot of the entertaining deductions that I talked about will probably be pretty useless for your own personal tax return, there are two key takeaways for you. The first is to remember the ATO’s three golden rules which apply to all work-related deductions. In order to claim a work-related deduction,
1) you need to have spent the money yourself
2) the expense must directly relate to earning your income and
3) you must keep a record of the expense.
The second is to check out the ATO’s list of ‘Occupation and industry-specific guides’ for the one that applies to you. There is a whole heap of useful information there that will help you out with your tax return.