Australians are claiming billions of dollars worth of tax deductions for work-related expenses and managing their tax affairs as the concessions built into the tax system weigh on the amount of revenue flowing into federal coffers.
, used this week to justify the federal government’s planned changes to the tax on superannuation balances of more than $3 million, also show forgone revenue on everything from childcare to business research and development is growing faster than parts of the super system.
The surge in house values and share prices over the past four years have driven up the value of the concessional tax treatment of capital gains, but higher interest rates and a slowing economy are expected to reduce these concessions over the next three years. In 2019-20, 86 per cent of the total tax reduction via work-related deductions went to people with an above median taxable income, with more than one-quarter going to people in the top 10 per cent of income earners.
This year, the forgone tax is estimated to cost the budget $1.6 billion. Labor went to the 2019 federal election with a now-abandoned proposal to cap the amount a person could claim for managing their tax affairs to $3000. The exemptions, put in place as part of the original deal struck by John Howard with the Australian Democrats in 1999 to get Senate approval for the GST, are expected to be worth $31 billion this year.
Treasurer Jim Chalmers said Taylor had launched a “ridiculous, dishonest scare campaign” against the superannuation change.“Labor making tax concessions for people with millions of dollars more sustainable and affordable versus the Liberals, who go after the most vulnerable people with robo-debt and attack Medicare, like Peter Dutton did the last time that the Liberals were in office.”
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