Are You Allowed to Declare Less Expenses to Increase Your Income?

Saul Goodman on 17/02/2020 - 12:21
Last edited 17/02/2020 - 12:39 by 1 other user

This is kind of stupid but we were having this discussion this morning and we couldn't really come up with an answer and Google was not any help. I'm genuinely interested now so just seeing if anyone here knows.

Say you work for yourself and you want your tax return income to be over a certain amount. Is it legal or illegal to NOT claim deductions to increase what your income shows on your NOA?

Everything I could find about tax fraud and evasion is about intentionally lying to 'limit' the amount of tax paid.

However by not declaring some expenses you are either getting less of a tax refund or paying more tax.

Doesn't seem like it would hurt the Government but then someone pointed out you could unfairly sign up to some bank reward cards etc when you would not have been able to.

Dodgy either way but is that still fraud?

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  garetz on 17/02/2020 - 12:31

  +14

  It is not illegal to not claim deductions that you are legally entitled to.

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  abb on 17/02/2020 - 12:32

  The ATO/government will 100% definitely not come after you, or care in the slightest, if you fail to claim any deductions you're entitled to.

  If you're doing it with the intent to deceive, it's arguably fraud. I can't see it as remotely likely that the bank would ever find out or care. Assuming you did actually earn the money, they don't care how you choose to spend it.

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  Soluble on 17/02/2020 - 12:33

  I will be doing similar this year. Went too hard last year and can't get a home loan because of it.

  (I didn't think I would be in a financial position to get a house so early on so I didn't bother me at the time)

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  bobbieb on 17/02/2020 - 12:40

  +3

  Without understanding the gist of the conversation, it's difficult to even fathom a guess as to why what you're saying would be considered 'illegal'.

  Superficially, if not deducting expenses were a crime, then it would open the door to rather farcical situations like being pings for losing a receipt for a deduction that you could have claimed.

  Doesn't seem like it would hurt the Government but then someone pointed out you could unfairly sign up to some bank reward cards etc when you would not have been able to.

  I'm not sure that this really makes sense. Most card application assessment systems really only care about what your take-home pay is (ie. will you have enough cash to make the repayments for the limit you're requested). If they allow you to enter a taxable income - presumably what you're talking about here - then they'd be converting back to net/gross income to run their calculations.

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  Skramit on 17/02/2020 - 12:40

  +5

  This is kind of stupid

  The greatest threads always start like this… ;)

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  ihbh on 17/02/2020 - 13:07

  +2

  not declaring some expenses you are either getting less of a tax refund or paying more tax

  I can even help you implement this. Let me pay some of your work expenses and keep the receipts and you reimburse me.

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  apsilon on 17/02/2020 - 13:11

  -6

  The income you declare to the ATO (ie your gross income) is before any deductions. If you're declaring an income after subtracting deductions you're doing it wrong and better hope you're not audited. Therefore your question is irrelevant.

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  Seraphin7 on 17/02/2020 - 13:17

  +1

  Say you work for yourself and you want your tax return income to be over a certain amount. Is it legal or illegal to NOT claim deductions to increase what your income shows on your NOA?

  Not illegal.

  Dodgy either way but is that still fraud?

  No.

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  crashloaded on 17/02/2020 - 13:19

  -1

  This exactly what brokers used to do to get mortgages pushed through. Causing the GFC 😂

  It depends on your purpose for doing so I guess.

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  Donaldhump on 17/02/2020 - 14:01

  +7

  Sure and if you want to be super dodgy claim them in few years time as an adjustment because you forgot.

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  [Deactivated] on 17/02/2020 - 14:15

  To knowingly lodge an untruthful document is against the law, but difficult to prove unless you admit it and not much to gain. It is still 'illegal'. There is a quite a large zone of illegal acts that don't get enforced.

  • 

    CheapskateQueen on 17/02/2020 - 22:22

    +1

    being eligible to claim a deduction is not the same as it being compulsory to claim a deduction

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  [Deactivated] on 17/02/2020 - 17:04

  -3

  It all boils down to you motivation for doing so. It could be seen as fraud.

  • 

    [Deactivated] on 18/02/2020 - 04:59

    +1

    *your

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  wannagrababargain on 17/02/2020 - 17:08

  +1

  It's not tax fraud but it's dishonest accounting. Your income is your income. A potential creditor will first ask you for your gross income, then secondly ask what your expenses are. So you're talking about keeping one set of books for the tax man and one set of books for your creditors? How would this even work? Probably easier to just lie on the special 'rewards card' appliation and hope they don't check rather than set up some elaborate scheme involving the tax office.

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  Typical16-bitEnjoyer on 17/02/2020 - 17:23

  It's not illegal in a tax sense. You're allowed to pay more tax if you really, really, really want to.

  Whether it's fraud depends on the reason or reasons for even wanting to do this.

  Whether what you're suggesting is idiotic doesn't require any further conversation.

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  haemolysis on 18/02/2020 - 16:36

  I don't think it can be viewed as fraud, but I'm at a loss as to how you might manage this without witholding information from your credittor (which IS fraud).

  You're are mixing up two different concepts which have some overlap but are not entirely the same: expenses, and tax-deductible expenses. The problem is your credittor will still want to know ALL your expenses and will be subtracting them from your reported income anyway. Just because YOU haven't deducted it for tax doesn't mean THEY wont deduct it to find your "net".

  If you meet their "minimum income" but your expenditure is too high, then you are only fooling yourself! You will still fail to meet lending criteria.