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So what can you legally claim and do at tax time and not fear the ATO?

Friday, June 30, 2017

Yes, today is the day that every self-employed person dreads.  It’s end of financial year! So what can you legally do with your tax and be certain you have acted legally?

Earlier this week we published (with his permission) correspondence from the ATO to Rod Douglass. Robert Gottliebsen also wrote this up. The reason for publishing this is so you could see for yourself exactly how the ATO treats self-employed small business people. We’ve had a big response.

On reading the correspondence, some people have commented that Rod was actually in the wrong. When we first read the correspondence in 2015 we also thought that that could be a reasonable conclusion! But then, when we looked at the facts, the reverse was the case. Rod had done nothing wrong. That’s why we came in to defend him. Rod had simply followed what, in 2006, the ATO had said on its website he could do!

Now look at this. It’s ATO advice on what you can do and structure if you are running a small business professional service. BUT. What the ATO actually describes is everything you cannot do. Even where they describe things that should be okay, the ATO hedges its bets with a ‘maybe’ or a ‘most likely’ or ‘should be okay’. Read it yourself and see if we’re wrong. Where in this does the ATO actually say what is definitely okay and legal?

If we’re right, the outcome is that you can put in your tax return and not know if you are okay. The ATO can come at you, say, in 10 years’ time as they did with Rod, and concoct against you an allegation of fraud or evasion. Read Rod’s situation again.

There’s a simple principle at stake. For the tax system to work it must be clear, consistent and reliable. On any measure for self-employed people, tax administration by the ATO is a failure. It’s damaging small business people and the economy. It has descended into a corrupt process. We’ve a lot more evidence to back this up which we will release progressively.

Maybe Australia is not alone in this. Look at this YouTube clip from the USA.

And look at this. It’s an ATO pre-EOFY release subtitled ‘11 deductions you (probably) can’t claim’. Its seems that the ATO just refuses to tell us what we can do.

But we really like these suggestions from Flying Solo. They’ve put together a list of super-duper items that should be tax deductible. Try, for example, ‘productivity enhancing coffee’ costs. Makes sense! Even better: ‘motivational snacks’. What about retail or wine therapy? Yes! Our favourite? Work-at-home uniforms (ugg boots & yoga pants!)


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