The problem of work-related tax deductions.

• Author: Sullivan, Lucy
• Position: Essay
• Pages: 53(5)

Forty years ago, the majority of Australians completed their tax return forms themselves, with the help of a four-page brochure of instructions. Since the introduction of the "plain English" 100+ page volume of guidelines in the late 1980s, and despite supposedly higher levels of education, increasing numbers have felt themselves incompetent in the face of this annual task, and have turned to tax consultants for assistance.

I remember my feeling of impotent fury, when first confronted with the "plain English" guidelines, that what had been so simple had been made so baffling--it took considerable random search even to discover the address to which returns were to be sent. A decade or so later, however, it became clear that it was not just the TaxPack's design that was at fault, but that changes and complications introduced into the tax system itself had made the new tome of instructions necessary. As a result, large numbers of Australians were being driven to tax consultants out of fear of failing to claim for a novel array of deductions and offsets (formerly called rebates) and thus paying more tax than necessary.

The introduction of these new, individually targeted, deductions and rebates began at about the same time as an earlier generic system of deductions and rebates--largely supporting family incomes--was withdrawn, and over subsequent years they sprouted and specialised to reach their present level of complexity. Work-related deductions for wage-earners were probably introduced analogically to deductions for the costs of running a business, but in fact they have meant that, selectively, for some businesses and some types of employment only, business costs can be transferred from the company or employer to the individual employee, and thence to the general taxpayer.

The introduction of tax offsets in their present form appears to have followed the superannuation initiatives of the late 1980s, which attempted, with limited success, to move the growing aged population away from dependence on our long-established Old Age Pension scheme. However, their proliferation has, I conjecture, also aimed at lowering net taxes for certain categories of low-income people (but with marked variation in what is considered low), while avoiding the problem that in progressive tax systems a reduction in tax rates at the lower levels of income always delivers greater absolute, although not greater relative, benefits to higher incomes.

My criticism is not of deductions and offsets in themselves, but of the complexity and variability of the rules of eligibility and the rates applied in quite similar conditions and circumstances, and the fact that they often deliver insignificant monetary returns in relation to the difficulties of claiming them reliably via the services of tax consultants.

Work-related deductions

Let me give some examples of the baffling complexity of the claims rules as they relate to work clothing and travel.

Work-related clothing: The idea seems to be to allow claims...