Taxpayers are not ‘rorters’, says IPA

Late last week, Bill Shorten labelled the deductibility of the cost of managing tax affairs as a “rort”, reiterating Labor’s plan to limit the deductions for the cost of managing tax affairs to $3,000. 

"Did you know you can also claim as a tax deduction the hundreds of thousands of dollars you give to your accountant to deduct millions out of the tax system?" asked Mr Shorten, before adding that by not shutting down this deduction, the government is looking after the wealthy. 

IPA chief executive Andrew Conway, said in response that if Mr Shorten gets his way, the impacts on the community could be disastrous.  

"When the opposition proposed to cap deductibility of tax agents’ fees to $3,000 (May 2017), it assumed a one-size-fits-all approach works, which is simply not the case," warned Mr Conway.

He announced that the IPA will disseminate to its members the joint letter written to accountants by the Prime Minister and Treasurer, expressing concerns over the measure. 

"The Prime Minister and Treasurer have issued a letter to accountants expressing concerns over this measure, which we will disseminate to our members. If the opposition provides a response to these concerns we will also distribute the correspondence to members," Mr Conway said.

He clarified that the IPA believes Australians should pay their due share of tax, but "they should also be able to access the appropriate tax deductions available to them to ensure they are not overpaying".

"Labor’s views on this matter shows a lack of understanding about, and respect for, what it takes for an accountant to appropriately manage an individual’s tax affairs. It is not always a matter of a simple tax return; there may be many other factors associated with our highly complex tax system," said Mr Conway. 

He cautioned that accountants can spend considerable time in areas of tax audit, litigation, disputes and other interactions with the Australian Taxation Office. Further complexities also exist with the formation of partnerships, trusts, property acquisitions and disposals. 

"These are all factors of a change in someone’s life circumstances which may also include ordinary taxpayers involved in situations like restructuring, divorce and sale of a business, to name a few," Mr Conway explained. 

"To bundle all of this under the heading of ‘managing tax affairs’ does not reflect a genuine picture of a person’s life circumstances and undermines the value of the work performed by accountants."

Simply put, he said, genuine taxpayers are not "rorters". 

"They should be seeking the right tax advice from their trusted adviser, the accountant, to make sure they continue to claim their rights and pay the correct amount of tax," Mr Conway judged. 

"Labor’s proposed measure 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. This could have disastrous impacts on the community."

He concluded that people who are generally deserving of a tax deduction would not be able to access it based on this proposal. 

"This is not affecting the top end of town, it’s really affecting individuals including small business owners," said Mr Conway.