Work-related expenses targeted by Australian tax reform

The loss of allowances for work-related expenses remains one of the options being considered by an Australian parliamentary committee.

The House of Representatives Standing Committee on Economics is looking at the possibility of cutting the allowances as a way of helping to fund lower rates of tax.

It’s part on an on-going inquiry following on from the government’s publication of the ‘Rethink’ discussion paper on tax reform.

Venture capitalist groups have been lobbying the committee to prevent the loss of any tax breaks for interest paid on business loans.

The committee was warned by AVCAL (Australian Venture Capital and Private Equity Association) that limits on interest deductibility could reduce business investment and stifle job opportunities.

But while allowances for interest payments may be viewed as too much of a risk, it may increase the likelihood that deductibles for work related expenses will be targeted.

As part of the review, the committee has been comparing the tax system in Australia with the set-up in Britain and New Zealand.

When it comes to deductible expenses, Australia currently offers a more generous allowance than its two counterparts.

Relaxed expense management rules

Australian rules allow expenses to be partially claimed if they are for combined work and private purposes - the work related portion being deductible.

Typical examples include costs for buying and cleaning uniforms, expenses for self-funded courses, computer equipment and work related transport expenses.

In the year 2011-2012, more than 8.5 million people claimed these kind of expenses, with a total cost of $19.4 billion.

In the UK, expenses can only be claimed if they are, “wholly, exclusively and necessarily in the performance of an employee's duties”.

New Zealand has disallowed work-related expenses claims since 1989.

One of the proposals outlined in the Rethink discussion document is to offer an option of a standard $500 deduction rather than having to provide detailed expense claims.

Webexpenses provides a smarter way for you to manage and monitor your staff expenses - saving time and money. You can find out more here