The $500 standard tax deduction announced in the Federal Budget tonight is a fraction of the average currently claimed by taxpayers.
Adrian Raftery, CEO of accountantsRus, says that taxpayers may be losing out if they accept a proposal in the Federal Budget and elect to accept the standard deduction in their tax return.
“I will personally do tax returns for free if I don’t get a minimum 10% variance on what the taxman calculates … the standard deduction is ridiculously low and really a back-handed tax grab,” said Raftery.
“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.
From 2012, taxpayers will be able to abandon old-style tax returns, opting instead for a $500 ‘standard deduction’ to cover work-related expenses. With the standard deduction increasing to $1000 the following year.
Raftery 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 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.
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.
For more information on the ATO’s Taxation Statistics for 2007/08 for personal tax click here.