Heed ATO stats before expense 'tinkering', warns H&R Block
H&R Block has urged the government to pay close attention to the ATO's tax stats before tinkering with work-related expense deductions this budget season.
"One of the proposals which has been widely floated is the abolition (or substantial reform) of our current system of work-related deductions. The perception appears to have taken hold – fed by some over-enthusiastic tax policy wonks and ex-ATO staff – that work-related deductions are essentially one big rort on the tax system," the firm stated.
"The reality, of course, is rather different. People claim deductions for work-related expenses because, in the course of earning their income, they are obliged to spend their own money, for instance driving between worksites, staying overnight whilst working away from home, using their own phone or computer for work purposes or buying new tools, work boots, or other job-specific clothing."
It added: "Quite simply, they can’t do their job without spending this money."
H&R Block stressed that the following statistics must be considered before altering work-related expenses:
- Of Australia’s 9.7 million taxable individuals, 88 per cent of them made a claim for work-related expense deductions.
- The average size of claim was $2,417.
- Over 3.2 million people made a claim for work-related car expenses, more than 6.2 million people claimed for work-related clothing and uniforms and nearly 500,000 people made a claim for self-education expenses to maintain or improve their skills.
- Self-education claims tend to be among the larger ones (averaging $1,865 each) but arguably that investment flows through into the economy in the form of a better trained, more innovative workforce.
- Typical claimants for work-related expense deductions reside in lower- to middle-income households, often in electorally crucial areas such as Western Sydney.