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IPA tells Labor to come clean on accounting service fees
The figures on accounting fees provided by Labor in justifying its managing tax affairs cap are misleading and only based on a very small sample, says the Institute of Public Accountants.
Prior to the release of its final costings, Labor stated that based on Tax Office data from the 2016–17 financial year, there were 69 people that earned more than $1 million but paid no tax, with 27 claiming an average $607,000 for the cost of managing tax affairs.
Shadow treasurer Chris Bowen said the figures justified Labor’s proposal to cap deductions for tax advice at $3,000 and reiterated that it is the top end of town that benefits most from the tax deductibility of managing tax affairs.
IPA chief executive Andrew Conway said the figures are only based on a very small sample and do not justify a policy of capping deductions for tax advice.
“In addition, if the numbers being bandied around are using aggregated data, they will result in grossly overstated averages for adviser fees for this sample size.
“The ATO data that has been used related to the 2016–17 financial year. The label in the income tax return that makes up these figures includes adviser fees, ATO interest charges and litigation costs.”
Mr Conway said that from 2018 onwards, there will be a proper break-up of the three components.
“If aggregated figures are being used, then this is misleading the public,” he said.
“It is also misinformation to say that only the rich can access tax deductions; these are accessible by all Australians.”
Mr Conway said that it is highly inappropriate to have a universal cap for all taxpayers as circumstances differ, meaning a one-size-fits-all is inequitable.
“Our tax system is complex. Denying deductibility for seeking advice from a trusted adviser is inappropriate,” he said.
Miranda Brownlee
Miranda Brownlee is the deputy editor of SMSF Adviser, which is the leading source of news, strategy and educational content for professionals working in the SMSF sector.
Since joining the team in 2014, Miranda has been responsible for breaking some of the biggest superannuation stories in Australia, and has reported extensively on technical strategy and legislative updates.
Miranda also has broad business and financial services reporting experience, having written for titles including Investor Daily, ifa and Accountants Daily.
Its just another Labour ploy to say that they are going after the wealthy as the average taxpayer would not be paying anywhere near $3000 for managing their tax afairs0- Its just a deduction like any other expense in running a business or any other deduction for salary and wage earners. There a thousands of possible legal deductions that a taxpayer may be able to claim. Why is labor just focusing on one deduction in a possibility of thousands of potential deductions. Divisive and statistically erroneous.0
- Why is no-one pointing out that in a lot of these cases it is probably GIC, because GIC goes into the same line on the returns.
The maths of paying someone to generate a deduction doesn't stand up logically. Why would anyone spend a mil to get a deduction of (at max) $500k - all you have done is lost $500k.0 - Government makes tax compliance really complex and then denies a tax deduction for seeking advice so you comply with their complex rules. Yep thats politicians for you.0
- Typical. They propose to levy all these new taxes and conditions and then restrict the cost of accounting to manage for them.0
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