Five Deductions You Can’t Claim In Your Tax Return

Everybody wants to maximise their tax return by claiming as many deductions as possible. However, some deductions are definitely not allowed, even though it’s widely assumed that they are. Here are four that you should watch out for.

Laundry picture from Shutterstock

The Australian Taxation Office (ATO) has said it will be looking at inappropriate deductions across all industries this year, so you need to make sure your claims are legitimate. When in doubt, check the rules carefully, and seek professional advice if necessary. One common theme across most of the items we’ve discussed here is that you can’t claim for an expense if your employer has already reimbursed you for it.

Laundry costs

You can usually only claim laundry costs if you have to wear a uniform to work — and it generally only qualifies as a uniform if it has a specific mandated design and features a company logo, or is essential for your safety. No matter how snazzily your boss tells you to dress, a suit doesn’t qualify. Here are the guidelines for how to calculate laundry expenses if you are eligible.

Health insurance

The cost of health insurance isn’t something that you can deduct directly from your taxable income, but if you don’t pay for private health insurance, you will end up being slugged with extra penalty tax. So make sure you choose an appropriate plan if you haven’t already got one (there are lots of discounts on offer at this time of year to attract laggards).

Unlimited phone plans

If you have an unlimited phone plan but use it to make work calls, you may be tempted to claim the entire cost: after all, you can’t make a single call without paying for the entire plan. However, the Tax Office stance on this is clear: you can only claim a proportion of the cost, since the connection can also be used for private calls. Keep a diary to establish your usage, and claim a percentage based on that.

Charity donations that aren’t gifts

You can claim donations to charity against your taxable income, but only if you don’t receive anything in return. The Tax Office definition of gifts makes it clear that if you receive a raffle ticket; a chocolate, pen or similar item; or a meal, then it isn’t a donation and you can’t deduct it.

Any self-education expense

You can claim some self-education expenses, but only if the costs of the course or training involved have a “sufficient connection” to your current role. In other words: if you’re training for an entirely different role, you can’t claim any deductions.

Reminder: For specific tax advice relating to your individual situation, consult a registered professional.

Jeremy Cabral is the Publisher at, helping over 4.8 million Australians compare financial products every year. Connect with Jeremy on Google+, Twitter and LinkedIn.

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