The Best, Bravest and Most Brazen Tax Deductions Ever

As the end of the financial year approaches, thoughts turn to what you can reasonably do to bring your taxes down. Perhaps take heed from these crazies about what not to do.

Most small businesses will rely on the tax knowledge of their accountant to determine what deductions are allowable for their business or personal taxes, and the vast majority of us hire accountants who abide by the philosophy that if you want to reduce the chances of a tax audit, the general rule of thumb is, “when in doubt, leave it out.”
However, that doesn’t stop some people from trying it on. The types of tax deductions that people have tried to get through – and failed – include:

• The long-distance truck driver who tried to deduct the cost of ‘female companionship’ while on the road.
• The man who tried to claim the expense of keeping a dog that was supposedly bought as a security system.
• The man with a failing furniture business who hired someone to burn it down, and then tried to deduct the $10,000 paid to the arsonist – on top of the $500,000 insurance claim.
• The businessman who wanted to deduct the cost of a call girl he hired to entertain some clients.
• The saleswoman who wanted to deduct the cost of hair care, manicures and jewellery because she ‘needed to look good’.
• The real estate agent who sold lakeside property and tried to deduct the full cost of a personal pontoon boat.
• The businessman who wanted a full write-down on the cost of designer suits that were donated to a charity.
• The businessman who bought a racehorse, named it after himself, took clients to see it race, and tried to claim the cost of purchase and upkeep of the horse.

Mind you, some people have managed to get away with some equally interesting deductions such as:

• The professional bodybuilder who was able to deduct the cost of body oil purchased to make his muscles glisten in the spotlight during competitions (however, his efforts to claim a deduction for buffalo meat and special vitamin supplements were denied).
• The junkyard owner who was able to write off the cost of food he put out to attract feral cats, who also ate rats and snakes and kept the property safer for customers.
• The professional witch in the Netherlands who as able to deduct the cost of her witch training as an educational expense.
• The prostitute who claimed the cost of sex toys as a business expense.
• The stripper who claimed the cost of her breast implants.
• The man who was prescribed swimming as a treatment for his emphysema and was allowed to deduct most of the cost and upkeep on installing an inground pool.
• The couple who bought a small plane to visit their investment property, a seven-hour drive away, were able to deduct the cost of their trips to the property, including fuel cost and depreciation on the plane for the portion of time used for business-related purposes.
• The parents who claimed the dependent child deduction for a child who was not living in the home for most of the year because he had been kidnapped.
• The multinational search engine company (no names mentioned, but it rhymes with 'bugle') that earns nearly $1 billion a year in Australia through advertising revenue, but pays no tax in this country due to a complicated regime of transfer pricing, with revenues funneled through an Irish subsidiary.

So whille you're getting stuck into the books, why not think - even if you don't act - creatively!

Disclaimer: This is not to be construed as taxation advice. Neither the author nor Smarter Business Ideas is recommending that you try any of these methods at home. Please seek professional advice before engaging in complicated and potentially dangerous exercises such as completing a tax return!

Dr. Ray Welling is the principal of Welling Digital, a strategic content consultancy. He also manages a small digital content agency and is an adjunct lecturer in marketing at Macquarie University. Click here to see his past articles for Smarter, all of which are as good as this one.
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