Back in 2013, former Labor Treasurer, Wayne Swan, announced caps on tax deductible education expenses, which apparently risked growing out of control:
“The Government values the investments people make in their own skills and recognises the benefits of a tax deduction for work related self-education expenses. However, under current arrangements these deductions are unlimited and provide an opportunity for people to enjoy significant private benefits at taxpayers’ expense.”
The changes were seen as a significant savings measure that would save some $500 million over the forward estimates.
However, as noted by Paul Wallbank at the time, the caps on self education costs were curious in light of the unlimited deductions allowed for negative geared property investment:
So the government is going to save $500 million dollars over the next few years by capping legitimate educational expenses on the grounds they were ‘unlimited’.
We could ask why negative gearing continues to be unlimited where taxpayers claiming the expenses of property speculation cost the Federal government billions of dollars last year.
So Treasurer Wayne Swan says a salaried worker has effectively no limits on claiming losses from property speculation against their taxes but is subject to a ludicrously low limit for claiming education expenses.
This one comparison – between negative gearing and self education expenses – shows the magic pudding fairyland that Australia’s political leaders live in and their cowardice.
What’s bizarre about this policy is that most industries are undergoing major changes and almost every worker will have to reskill a number of times through their careers…
That Australia’s politicians and economic policies are focused on encouraging property speculation over skills only guarantees mediocrity.
Although mediocrity might be the world that suits Wayne Swan, Tony Abbott and the rest of Australia’s political classes.
Now the federal government is at it again, seeking to curb work-related tax deductions. From News.com.au:
Currently workers can claim a broad range of deductions including self-education, vehicle and travel, clothing, laundry and home office expenses.
With the cost to the budget bottom line hitting $6 billion, an inquiry into tax deductibility is mulling whether Australia should follow New Zealand’s lead and scrap work-related tax deductions altogether, or the UK’s and limit what workers can claim.
But the Courier-Mail reports Treasurer Scott Morrison favours a compliance crackdown targeting accountants and workers, who will face tougher scrutiny and be required to justify their expenses. The Australian Taxation Office is already working on a compliance plan, the paper reports.
A Treasury submission to a now-lapsed parliamentary inquiry into tax deductibility argued Australia’s system for work-related deductions is “relatively generous” compared with comparable countries, which were “more proscriptive or limited”…
Obviously people should not be allowed to claim bogus workplace expenses. However, it is the height of hypocrisy that the federal government is considering scrapping work-related tax deductions while maintaining unlimited deductions for property investments.
In the 2013-14 financial year (latest available data), there were just over 2 million Australian landlords claiming some $42 billion of deductions on their rental properties.
Moreover, there were nearly 1.3 million negatively geared landlords claiming on average nearly $9,000 each of losses against their property investments, totaling some $11 billion.
Anyone else spot the contradiction?
