The average tax deduction claimed by an individual taxpayer is $3,311 according to the latest statistics from the Australian Taxation Office (ATO).
The ATO released its annual Taxation Statistics report last month based on the lodgment of 12.6 million income tax returns for the 2007/08 financial year.
Adrian Raftery, CEO of accountantsRus, says that taxpayers may be losing out if they accept a proposal by the Henry Tax Review and elect to forgo lodging a voluntary tax return.
“By not claiming three grand in legitimate tax deductions the average person could be costing themselves as much as $1,000 … that is a lot of money in anyone’s language,” said Raftery.
He says that the level of allowable deductions is rising these days as more and more employees are required to outlay for work related expenses such as car, internet, computers and stationery. He says that the average deduction last year for work related purposes was $1,952.
The report also revealed that the average net rental deduction was just under $5,000 ($4,998) for the 1.7 million taxpayers who had a negatively geared property during the 2007/08 year.
Raftery says that he is doubtful that a voluntary tax system will be efficient as there have been a number of problems already identified over the past few years as the ATO has been trialing a “pre-filling” system in preparation of collecting income from all sources.
“In the pre-filling reports we have noticed that alot of income information is either late being reported or not being reported at all … and that is before all of computer problems lately,” said Raftery.
He cites that dividend and managed funds information takes as late as five months to process, whilst some taxpayers do not have their tax file numbers (TFNs) correctly recorded for some investments. He has also noticed problems with PAYG Payment Summaries that have been prepared by hand.
“You can download the report in July or August and think all is fine but do the same thing three months later and all of a sudden there is an additional few thousand in income.”
There were 5.9 million taxpayers who declared interest income and 3.4 million who had franked dividends in the 2007/08 tax year.
Raftery says that he will be encouraging people to check calculations by the tax office rather than merely accepting them.
“I will personally do tax returns for free if I don’t get a minimum 10% variance on what the taxman calculates,” said Raftery.
More information on the ATO’s Taxation Statistics for 2007/08 for personal tax.
