Interesting tax deductions…

From Ogden and Commissioner of Taxation (Taxation) [2016] AATA 32 (29 January 2016):

MS HAMMOND: Okay. In that same income year you also claimed an amount of secretarial services?
MR OGDEN: Yes.
MS HAMMOND: $5,388. That’s a payment you allegedly paid your son, who was seven and a half, in the income year?
MR OGDEN: Yes.

The AAT concluded that “I find that Mr Ogden’s son did virtually nothing for his father by way of secretarial assistance or anything of that nature. Indeed, the evidence established no more than that the son sometimes ran upstairs to the study when the phone was ringing, answered the phone and then handed it to his father.” Thats a lot of pocket money for picking up the phone.

MS HAMMOND: Now, you were working in your home office until 6.15?
MR OGDEN: Yes.
MS HAMMOND: And you then popped down the road to the St George Leagues Club which is – what – approximately five minutes from your home?
MR OGDEN: Yes. Across the road more or less, yes.
MS HAMMOND: And 10 minutes after you finish in your home office you’re ordering a meal at the St George Leagues Club?
MR OGDEN: Yes.
MS HAMMOND: And you say that’s an overtime meal?
MR OGDEN: Yes.

He claimed a series of interstate meals and then gave the ATO his diary that showed he never worked interstate (other than a few Canberra trips from Sydney).

MS HAMMOND: So you finish up work at 5.30 in the afternoon and you pack your family up and you’re heading off to the snow?
MR OGDEN: Yes.
MS HAMMOND: You stop at the BP at Marulan?
MR OGDEN: Yes.
MS HAMMOND: And you claim a meal?
MR OGDEN: Yes.

He thought he had worked very hard that day so he should get a tax deduction for the food on the way to the snow.

MS HAMMOND: Then in August you purchase even more items for these clients. You purchase another two packets of the Bega stringer cheese. Now you’ve got four of these packets by this stage. You also purchase Bega dairy cheese in the eight pack, Bega slice cheese. Can I ask you, did you actually ever offer anybody a Bega stringer cheese?
MR OGDEN: Probably David when he’s over.
MS HAMMOND: But David is not a business partner?
MR OGDEN: No.
MS HAMMOND: Did you offer the three gentlemen that you identified as coming to your home, a Bega stringer cheese?

He claimed an amazing amount of his groceries (including one month with 31 soft drink bottles… MS HAMMOND: So at this point you had 31 bottles of soft drink. Where were you keeping 31 bottles of soft drink? Did you tuck them under your desk in the office? MR OGDEN: They would have been consumed by the family – and 39 packets of monte carlo biscuits) in case a customer came to his home office – the only one he could think of was the tax agent who helped him put totter this tax return… I am going to offer all my clients Bega stringer cheeses…

He also claim almost 25% of his house as a home office (every cupboard) which was reduced to around 1.5%, he claimed rubber soled shoes as static electricity will destroy your laptop, almost $1,000 worth of batteries but the only thing he used that had batteries in it was a small calculator, and best of all he claimed all the groceries he purchased on the day his tax agent visited as the tax agent may have eaten some of the food (all claimed as cost of preparing the tax return)!

And my favourite quote…

I note that Mr Ogden also claimed, as deductible “stationery”, the following items – a wall chart, Texta colour pens, a “Dora the Explorer” pencil case, heart and star shaped stickers, crayons and art brushes. For the avoidance of doubt, I find that none of those were used in the course of gaining or producing his assessable income.

Thanks for clearing up the doubt…

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About Ken Mansell

As a stay at home Dad most of the week this is my way of pretending I am still the tax counsel of ASX and SEC listed companies, working at big 4 firms, working at the Federal Treasury, on the Henry Review and at Parliament House for the previous government.
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