Are your tax deductions about to be cut?

By Steven Marsten

It’s important that people raise matters to consider where it improves Australia’s economic outcomes, however this week I couldn’t believe what I was hearing (and reading). A spokesperson for a large National Accounting firm was proposing that we limit Taxpayers work related expense (WRE) deductions to a flat $1,000 per annum! This was suggested as a result of spiralling claims in recent years and in some cases - false claims. No one doubts there are always going to be some bad eggs.

You don’t usually hear us say this but thank goodness the ATO replied with a “common sense” approach – suggesting that a cap on WRE would not be productive to the nation.

Everyone in Business has the ability to claim costs in earning assessable income. That should not be different to a salary and wage earner. The ATO spokesman acknowledged that the House of Representatives standing committee on economics handed down a report - “Report on the inquiry into tax deductibility” (House Report) that made a recommendation to the government “not to alter the current arrangements despite evidence of a substantial increase in WRE costs”.

“Ultimately the report said it didn't want to tinker with the system too much, it was going to go ask the tax office to raise compliance, raise education and it was going to ask Treasury to come back with more concrete numbers about the tax gap,” said Mr Ram Pandey of the ATO.

For heaven’s sake am I missing something here? Taxpayers pay Income Tax on their wages as well as a Medicare levy and GST on most things together with a bunch of hidden taxes at the local government and state government level that most people aren’t even aware of. Quite frankly, denying a taxpayer legitimate tax deductions incurred in the earning of one’s wages does not sound fair or equitable and should not be up for consideration.

There is enough tinkering of the tax system including everyone’s superannuation seemingly on an annual basis and I know many would like to see the Governments live within their means for a change instead of devising ways to tax the average worker more! If we all thought Governments were spending our taxes efficiently, perhaps we would give more positive consideration to the various changes.