In May 2017, Labor announced that it would seek to introduce a cap on managing tax affairs if it came into government, in a bid to raise $1.8 billion over a decade.
The measure is expected to affect around 90,000 taxpayers, or 1 per cent of all taxpayers.
“It is interesting to note that the ALP proposal to cap the tax deductibility of managing tax affairs to $3,000 has not received more air play,” said IPA chief executive Andrew Conway.
“What do accountants and tax agents think about this proposal and its implication?”
Current laws allow taxpayers to claim expenses incurred in managing their tax affairs, including litigations costs such as Administrative Appeals Tribunal fees, purchasing software to allow the completion and lodgment of tax returns, and obtaining tax advice from a tax adviser.
Mr Conway has been highly critical of Labor’s measure, noting that such a cap would have a “disastrous impact” on the community.
“It is genuinely and obviously a revenue grab. If you cap it at $3,000, the likelihood of a person engaging appropriate tax advice is reduced,” Mr Conway told Accountants Daily last year.
“We think it would have disastrous impacts on the community. If you look at the people who are generally deserving of a tax deduction, based on this proposal, they would be unable to get it. This is not affecting the top end of town, it’s really affecting individuals who might be running small businesses,” he said.
“We think it’s tax policy construction gone mad.”
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Jotham Lian is the editor of Accountants Daily, the leading source of breaking news, analysis and insight for Australian accounting professionals.
Before joining the team in 2017, Jotham wrote for a range of national mastheads including the Sydney Morning Herald, and Channel NewsAsia.