The fact that ATO boss Chris Jordan has used high-profile national addresses to put the revenue cost of work-related expenses misuse in line with corporate tax avoidance could be the ATO “sending a signal” of major cuts to come.
“We are of course waiting on the data, but CPA Australia is concerned that if the commissioner can’t administer the current laws, there may well be a policy response required,” head of policy and corporate affairs at CPA Australia, Paul Drum, told Accountants Daily.
The federal government has promised to return the budget to surplus by 2021, and has so far culled some smaller items in a bid to reach that target. In the May 2017 budget, the Treasurer moved to disallow property investors to claim deductions for travel expenses.
“Here is a government with an appetite to make changes. I wouldn’t be surprised at all if it used the upcoming budget to come down hard on work-related expenses,” Mr Drum said.
CPA Australia has told government in its pre-budget submission to consider, among other items, the equity grounds which underpin current work-related expenses allowances.
“CPA Australia maintains its strong support for an equitable income tax system where all taxpayers — regardless of type — are able to claim tax deductions for qualifying expenses they have incurred in the derivation of their income,” the submission reads.
“If the evidence shows the need for policy reform in this area it is important that any changes do not abrogate the right of all taxpayers to make any claims for WREs at all,” CPA Australia said.
The tax office has made it clear that work-related expenses will be a priority surveillance and compliance area this coming tax time. Individual taxpayers, as well as tax agents with clients claiming above-average work-related expenses, should expect higher levels of scrutiny and potentially regulatory intervention.
You can read more about the ATO’s approach to work-related expenses this tax time here.