I still remember the day a teacher sat down and in front of me and asked me if I could claim depreciation on his brain for his many years of university study.
He was serious and my answer was a flat out ‘no’.
The question ‘what can I claim?’ is one of the most commonly asked questions of accountants and often the most misunderstood.
With tax time 2018 rapidly approaching, it would be fair to say a few folks out there are considering taking a gamble on one or two big-ticket items in the hope of success.
After 20 years in the tax game with Glyn Morris & Co, I’ve heard some ripping justification on expenses.
Can a farmer write off that new swimming pool as a ‘water facility’? Can a builder claim that expensive pair of Oakley sunglasses as sun protection? Can a hand model claim a pedicure?!
The basic rule of thumb is to ask: is the expense connected to generating income? If the answer is yes (and there are a few grey areas here), then you can claim it.
Justification is important and outlandish deductions might see you get some attention from the auditor, so make sure you have all your ducks in a row.
I was at a farm recently visiting a client who had an outboard motor which he declared was his operating water pump.
Sorry mate, no dice.
Another teacher knocked me for six when she told me she wanted to claim a ‘g-string’. It took me 20 minutes to find out the string was for her guitar, not a piece of her underwear.
In good news for those who employ the old stack-the-receipts-in-a-shoebox method, there’s a new, free app developed by the Australian Tax Office – myDeductions – designed to help sole traders and individuals keep their records organised.
Check out the online tutorials and learn how to easily record deductions/expenses, vehicle trips and best of all, snap and keep photos of all your invoices and receipts.
As for those funny claim stories, all of our accountants have a few which often get aired over a few beers at the pub.
And I know what you’re thinking. Surely there must be a way to claim your Friday night pub shout? Sorry guys … the answer is ‘no’. Even if you’re shouting your accountant (and you’re welcome). Anything concerning alcohol is classified as entertainment expenses.
So save your money and buy a six-pack.
Andrew Morris is the Managing Director of Glyn Morris & Co.