Australia’s current tax deduction system has been a hotly debated issue in recent months. There have been strong opposing views, with one side claiming that the current system is severely flawed, due to the sheer amount of fraudulent and petty claims occurring. However, many are claiming that the current system should be kept in place, and stating the problem as being with the public not being educated enough when claiming work-related expenses.
Joanne Dunne, director at Accounting firm PwC is strongly in the corner of a reform of the current system, stating that the current tax deduction system is “out of control”. Dunne has claimed that the current system is inefficient, due to “silly expense claims” that are burdening the ATO’s resources. Dunne also stated that the time spent on these trivial claims should be allocated to “more important” work, and also claims that the cost of investigating these false claims outweighs the costs recovered. The proposition of a simple yearly $1000 blanket deduction for each taxpayer has been discussed, with the view of simplifying the system and nullifying any incorrect claims made.
This has proven to be an unpopular recommendation for some; with Ram Pandey from the ATO expressing disapproval of this idea. Pandey has defended the current system, explaining that the actual problem lies with the public’s misunderstanding of what should be claimed. He argued that a complete overhaul of the system would not be practical, and that it should undergo some gradual tweaking and enhancement instead.
We found this debate quite interesting; we believe that any changes in the tax system are definitely worth keeping an eye on for any small business owner. Our taxation accountants are also very knowledgeable in this area, if you’re looking for some specific advice or simply want to speak with an accountant about your tax planning options, call us today to schedule an appointment on (07) 3367-0852.