Can I claim a tax deduction for my groceries?

By November 12, 2019 Tax

Tax accountants get asked lots of great questions that provoke thoughtful and interesting conversations. Things like “how can I grow my business and get it ready for sale?” or “my corporate structure is a mess, can you untangle it?”. It create variety in your day and we love it.

We also get asked lots of other questions. And some of these questions involve us saying “no, but” quite a bit. Here are a few such gems.

Can I claim a tax deduction for my clothes?

A central concept behind the ability to claim a tax deduction is that the outgoing must have a direct connection with the income you’re earning. With that in mind, it might be fair to say that I must wear clothes to work and I must go to work to earn income, so therefore I must be able to claim a deduction for my new pair of jeans.

Unfortunately, this isn’t the case! Any expense that is deemed “private in nature” is not allowable as a tax deduction. This will include your clothes. There is a notable exception for uniforms, but just because many of us wear the same thing every day out of efficiency/habit/laziness doesn’t make it an actual uniform. A uniform will be branded with the company logo, colours, etc. There’s also an exception for costuming, but it’s fairly limited (ask yourself this – would I wear this to the pub? If the answer is yes, then you probably can’t claim it).

Can I claim a tax deduction for my groceries?

Nope. As discussed above, anything private in nature cannot be claimed. Yes, you need to eat to stay alive and you need to stay alive to go to work and earn income, but unfortunately the tax laws consider the need to stay alive an entirely personal and private matter.

Can I claim a tax deduction for my bicycle?

Maybe, but probably not. See here.

Can I claim a tax deduction for my mortgage or home rent?

If you’re an employee wanting to claim these types of costs, known as “occupancy costs”, then you’ll only be able to do so if your employer doesn’t provide an alternative place for you to work (e.g. a cubicle at HQ) and you’ve had to set aside a portion of your home as a dedicated work space (dedicated means not readily adaptable to private use, more on this below).

And if you are running a business, then the space needs to be set aside exclusively as a “place of business” and not readily adaptable to private use. This means yes to the front rooms converted to a dentist surgery and no to a laptop on the couch. If you do have a place of business and you own the property then please note you’ll be exposing that part of the property to CGT whether you claim the mortgage interest or not.

You can read more here.

Can I claim a tax deduction for my holiday/honeymoon … erm, work trip … to the Maldives?

It’s perfectly okay to claim costs associated with work trips, but not so much for private trips. You need to break down the costs into flights, accommodation and meals & incidentals. You’ll also want to have a diary that shows what you did for work on each day you were over there.

Flights can be claimed in full if the purpose is primarily for work. This means if you go to a 4 day conference and tack on a 4 day holiday, then you can claim 50% of the costs. However, if you went for a 4 day conference and added on a day of sightseeing at the end, you can can claim 100% of the airfares.

Accommodation, meals and incidentals can all be claimed 100% for any day that you were working. Days that you weren’t working cannot be claimed.

Can I claim a tax deduction for my car to get to and from the office?

No. Whilst admittedly necessary for most of us to get paid, travel to and from the office is considered to be private in nature and therefore not deductible.

That said, there are myriad types of car travel that wouldn’t be considered private in nature and thus possibly deductible: going to and from meetings, trips from home if you’re considered an “itinerant worker“, trips involving the carrying of heavy and bulky tools, and more. See here.

Do you have any burning tax questions that you’d like to ask? Why not drop us a line? We’d love to help.