Special provisions in tax law provide that certain items will never be tax-deductible.
Even if you have incurred this expense in earning your income, they will still not be tax-deductible. In total, there are 35 different items explicitly mentioned in this area of tax law as not being tax-deductible, with some of the more common items being:
- Penalties: You cannot claim any fines or penalties imposed under any laws (e.g. if you receive a parking fine when parking in the city for work-related purposes).
- Payments to reduce your HECS or student debt.
- Travel expenses of a relative when you travel for work-related purposes (unless they are also travelling for their work-related purposes).
- Wages paid to an associate that is more than reasonable for the work they do (e.g. your spouse cannot simply be paid $30,000/year to perform 1 hour of admin work a week for you).
- Payments to maintain your family (this usually applies to farmers, who feed their workers who may also be their family).
- Expenses to obtain or maintain membership of a recreational club.
- Expenses relating to a recreational boat more than the income earned from that boat. There is no negative gearing (‘running at a loss’) into a boat unless it is for a real and genuine business.
- Bribes to public officials both here and abroad (even if they had to be paid to get something approved).
- Expenditure relating to illegal activities.
- Superannuation guarantee charge- if you are late in paying your employee’s superannuation, you don’t get a tax deduction when you do eventually pay it.
- Interest on borrowings to make non-concessional superannuation contributions.
- Travel expenses related to a residential rental property.
- Expenses associated with holding vacant land
- Where you are required to withhold taxes from certain payments such as interest, royalties or wages and then fail to withhold the required taxes, tax deductions cannot be claimed on these payments.
Some of these expenses are avoidable (such as the superannuation guarantee charge or the failure to withhold taxes from payments). It is essential to consult with us to ensure you are not wasting money on expenses that will not provide you with a valid tax deduction.