As tax time approaches, you might be wondering what you can (and can’t) claim on your business tax return.
While many deductions are straightforward, there are some surprisingly valid expenses that the ATO accepts — if they meet the right criteria.
Here’s a look at a few unusual but legitimate deductions, and the golden rules you need to follow to stay compliant.
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When Are Helicopters and Body Glitter Tax Deductible?
Would you claim a helicopter ride as a tax-deductible expense?
One client of ours did — and with good reason. While overseas for work, they needed to get between meetings in Los Angeles. Instead of sitting in gridlocked traffic, they hired a helicopter. Since every destination was business-related, the flights were technically work commutes — and therefore deductible.
Here’s the key: the ATO isn’t concerned with how much something costs — it’s concerned with whether there’s a clear connection (or “nexus”) between the expense and your business activity.
In another case, a client working as a club dancer successfully claimed body glitter as a work-related expense. Normally, makeup and personal items aren’t deductible — but because the glitter was used exclusively for work, it met the ATO’s criteria.
Tempting as it may be to go shopping and write everything off as a business cost, remember: don’t spend $1 just to save 25 cents.
The Golden Rules of Tax Deductions
1. Establish a Work-Related Nexus
The expense must be directly related to how you earn your income. The stronger and clearer the connection, the more legitimate the claim.
Let’s say you run a craft brewing business and want to claim other brewers’ products as research. A single beer or a six-pack might be reasonable. A full case of the same beer? Probably not.
2. Keep Your Receipts
This one’s simple — no receipt, no deduction. Bank statements aren’t enough. The ATO needs itemised proof of what was purchased and when.
That doesn’t mean you need a shoebox full of fading paper. Use digital storage instead — scan or photograph your receipts and keep them organised. Your accountant should be able to help you find a system that works.
What’s Really Happening at the ATO During Tax Time?
Forget the mental image of suited ATO agents reviewing every line of your return. In reality, most returns are processed by a computer algorithm.
The ATO system compares your claims against industry benchmarks. If your deductions fall within the expected range, they’re typically processed without issue. If your return stands out, it may be flagged for review — at which point a human may step in to assess things further.
As long as your claims are legitimate and well-documented, there’s no reason to stress.
How to Get Your Tax Deductions Right
Even with a solid understanding of ATO rules, it can be tricky to work out what you can (and can’t) claim. That’s why working with a tax accountant makes a huge difference.
Your accountant can help you:
- Confirm which claims are legitimate
- Clarify how much of an expense you can claim
- Identify deductions you may have missed
- Ensure you’re keeping the right records
Want help preparing your next tax return? Get in touch with JVP Advisory today and make sure your deductions are done right — no helicopters required.
