Dodged bullet - No change to work related deductions
Despite claims of Taxpayers over-claiming work related expenses, the government has refrained from making any ad hoc changes to the eligibility rules.
“We are pleased that the Government has not taken away the right of individual taxpayers to claim legitimate work related expenses,” said IPA chief executive officer, Andrew Conway.
“Improving education and guidance materials in response to over claiming is also welcomed.
“Taxpayers should consider themselves lucky indeed that that the Government has retained the current framework for determining entitlement to claim expenses related to work.
“Tax professionals feared that the Government would tighten the WRE eligibility rules or introduce a standard deduction regime to address the rising cost of taxpayer’s claims.
“Australia has one of most generous tax regimes when it comes to claiming work related deductions.
“Other countries have either removed this entitlement, or have stricter eligibility requirements or alternatively introduced a standard deduction regime.
“Australia’s tax system has developed a complex deductibility regime that taxpayers need to navigate under our self-assessment rules in order determine their entitlement.
“The IPA does not support a standard deduction as it can lead to unfair tax treatment particularly for some employees who incur legitimate work related expenses which are not reimbursed by their employer whilst rewarding those who are fully compensated.
“Those skirting their obligations and deliberately over claiming should not rejoice as the ATO will be provided with an additional $130 million to increase compliance activities targeting individual taxpayers and their tax agents.
“The funding will go towards new compliance activities, including additional audits and prosecutions, improving education and guidance materials, pre-filling of income tax returns and improving real time messaging to tax agents and taxpayers to deter over-claiming of deductions,” said Mr Conway.