There are many misconceptions about allowable tax deductions, that can lead unaware taxpayers to make incorrect claims, and get the attention of the “tax office”.
Here are some common examples:
Fiction:
Everyone can claim automatically $150 for laundry and clothing, 5,000km for work-related car expenses using the cents per kilometre method, or $300 for work-related expenses, even if they didn’t really spend the money.
Fact:
There is no such thing as an “automatic” or “standard deduction”. Proof exceptions provide relief from having to keep receipts in certain circumstances. While you don’t need receipts for deductions under $300 for work-related expenses, $150 for laundry expenses does not include clothing or if you are claiming 5,000km or less for car expenses using the cents per kilometre method, you still must have spent the money, it must be related to earning your income, and you must be able to explain how you calculated your claim.
Fiction:
As long as you have a bank or credit card statement, you don’t need the actual receipt.
Fact:
To be able to claim a deduction you must be able to show that you spent the money, who the money was paid to, what you spent it on and when you paid for it. There are some substantiation exceptions that may apply.
Fiction:
If you work outdoors in the sun, you can claim makeup as long as it contains sunscreen protection.
Fact:
Cosmetics are usually a private expense, and the addition of sunscreen protection does not automatically make it tax deductible. It may be deductible, if the primary purpose of the product is sun protection and it has a high SPF rating, and the cosmetic component is incidental.