Air fryer fails tax deduction ‘pub test’, says ATO

The Tax Office has detailed its tax time priorities for 2025 and “unbelievable” tax deduction attempts it has seen over the years.

The ATO has set its priority list for the fast-approaching tax time, with the reminder that its role was to collect and correct the amount of tax that is owed and exaggerated deduction attempts would not be tolerated.

According to the ATO, over the years, it had received “wild” work-related expense tax claims people had tried to get past, with many not making the cut.

The ATO said some of the most “outrageous” deduction attempts it saw last year included a mechanic trying to claim an air fryer, microwave, two vacuum cleaners, a TV, a gaming console, and gaming accessories as work-related, which the ATO immediately denied as the expenses were of a personal nature.

A truck driver tried to claim swimwear based on the reasoning that it was hot, while they had stopped in transit and wanted to go for a swim, again denied based on a personal nature.

Finally, the ATO revealed that a manager in the fashion industry attempted to claim over $10,000 in luxury-branded clothing and accessories to be “well presented at work” and to attend events, dinners, and functions, which the ATO rejected.

ATO Assistant Commissioner Robert Thomson said that while some people had tried their luck with unusual work-related deduction claims, most people realised that in order to claim an expense, it needed to meet strict criteria.

“While a lunchtime dip might clear your head for work, swimwear for a truckdriver is clearly not deductible. We know in many instances mistakes relating to work-related expenses could be avoided with a little time and effort,” he said.

This year, the Tax Office said the ATO would be focused on areas it saw frequent errors, including work-related expenses, working from home deductions, and in respect to multiple income sources.

According to the ATO, work-related expenses must have a close connection to income-earning activities and taxpayers should be prepared to back it up with records such as a receipt or invoice.

If deductions don’t meet the “pub test”, then it would be unlikely for a claim to meet the strict criteria, the ATO said.

“Don’t fall into the trap of thinking you can claim expenses like travel to and from work and childcare costs. These expenses are personal in nature and cannot be claimed. When in doubt, look for guidance on the ATO website or speak with your registered tax agent,” Thomson said.

“If you’re not sure what you can or can’t claim, check the ATO website for detailed guidance, or ask your registered tax professional, if you have one. Don’t just claim it and hope for the best as penalties and interest may apply.”

The working from home deduction was noted to be one of the most claimed work-related expenses each year, with many of the 10 million people who claim a work-related deduction claiming one relevant to working from home.

Thomson advised there were two ways to calculate a deduction for additional expenses incurred by working from home – the fixed rate method and the actual cost method.

To claim a working from home deduction, Thomson said you must be working from home to fulfil your employment duties and there must be records to prove incurred additional expenses due to working from home.

The fixed rate method would allow taxpayers to claim 70¢ for every hour worked from home and covers additional running expenses difficult to apportion, like internet, phone usage, electricity, and stationery.

To claim the actual cost method, taxpayers must have records of all expenses claimed and the work-related use of the expenses to back up the deduction.

Thomson said each source of income someone has would have different deductions available, depending on the nature of the income and occupation.

“The ATO is reminding Australians to declare all sources of income, and make sure they are included on their tax return. This includes side-hustles, for example if you are providing ride sourcing services or selling services via an app,” Thomson said.

Chartered Accountants ANZ also shared “cheeky claims” they had seen during tax time, with a taxpayer trying to claim a family trip to a tropical island and another trying to claim a luxury yacht “because they might have some business to do on the islands”.

CA ANZ tax leader Susan Franks said chartered accountants discouraged people from making fraudulent claims “because the ATO will not be laughing”.

“Chartered accountants are experts. They work hard during tax time to make sure their clients’ tax returns are spot-on and follow the rules, which means there are less mistakes going to the ATO,” she said.

“We understand that some Australians might be tempted to push the boundaries, but let’s avoid making dubious claims this year.”