Tax specialist warns on proposed deductions limit
Walker Wayland Australasia tax specialist Paul Marini has cautioned the Labor Party about a proposed limit on deductions.
During the Opposition's Federal Budget reply speech last week, Labor Party leader Bill Shorten promised that a Labor Government would cap the amount individuals can claim as a tax deduction for the management of their tax affairs to $3,000.
Mr Marini, who chairs the tax practice group of international accounting network Walker Wayland Australasia, said affected individuals could be penalised for simply having to deal with a complex tax system and ever increasing requirements of the Tax Office.
Mr Shorten quoted statistics indicating that 48 individuals who earned more than $1 million paid no tax at all in the 2015 financial year. He said one of the largest deductions claimed was for amounts paid to accountants who help them exploit loopholes in the tax system.
"A cap is unlikely to affect the majority of individuals," said Mr Marini. "However, it does have the potential to disadvantage more sophisticated taxpayers who are trying to do the right thing.
"Incurring accounting fees in excess of$3,000 for the management of an individual's tax affairs does not necessarily mean the taxpayer is involved in aggressive tax minimisation."