If we wanted to, we could stop filling shoeboxes with receipts. Here’s how to simplify work-related tax deductions


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John Minas, University of Tasmania and James Minas, Ithaca CollegeEver wondered why you’re still collecting receipts on the off-chance the Tax Office wants to see them?

A decade ago, fired up by what he’d read in the Henry Tax Review, Labor Treasurer Wayne Swan promised to end what he said was the “hassle of shoeboxes full of receipts”.

From 2012 onwards everyone would be offered a standard deduction of $500 in lieu of claiming work-related and tax-preparation expenses. It was to climb to $1,000 from 2013. 6.4 million Australians could stop stuffing shoeboxes.

Then a year later his focus changed. He had decided not to proceed because of a separate change to the tax-free threshold he said would free 1 million taxpayers from lodging returns.

As a result, we’ve kept stuffing receipts into shoeboxes (and email archive boxes).

The biggest deductions are for work-related car expenses (one-third of all taxpayers at a cost of $8.4 billion in 2017-18), travel expenses ($2 billion), uniform, clothing and laundry ($1.8 million) and self-education ($1.1 billion).

Laundry, the use of cars… we’re claiming billions

Overclaiming appears to be rife.

According to the Tax Office, while many of the overclaimed deductions are small, collectively they constitute “a significant amount of lost revenue”.

We have used Tax Office data to calculate ways in which we could revive Swan’s proposal in order to give everyone who wants it a standard deduction (and others more, up to a cap) without increasing the total paid out.

We could make most of it automatic

The data has helped us come up with four options, each of which our modelling tells us would provide a good balance between increased simplicity for most and limits on deductions for a few, costing no more than at present.

In 2017-18, the median work-related deduction was $1,116.

Our options are

  • a standard deduction of $1,160, with a cap for actual deductions of $7,000
  • a standard deduction of $1,040, with a cap for actual deductions of $8,000
  • a standard deduction of $830, with a cap for actual deductions of $10,000
  • a standard deduction of $680, with a cap for actual deductions of $12,000

Under Option 1, 61% of taxpayers would be financially better off and 6% worse off; under Option 2, 60% would be better off and 4.5% worse off; under Option 3, 55% would be better off and 3% worse off; and under Option 4, 51% would be better off and 2.3% worse off.

Many of us would be better off, a few worse off

In each option, the typical income of the small proportion of taxpayers who would be made worse off exceeds $90,000 and the typical income of the larger proportion who would be made better off is near $40,000.

The Blueprint Institute has put forward a different proposal for a $3,000 standard deduction covering work-related and a range of other expenses.

Unlike the options we have put forward, the Institute’s proposal is far from revenue-neutral — on its own estimate costing tax revenue $5 billion per year.




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Be careful what you claim for when working from home. There are capital gains tax risks


A bolder way of simplifying the system would be to abolish work-related deductions altogether, as New Zealand did in 1987.

Arguments for keeping deductions in some form, are that people have grown used to them, and without them, occupations where big work-related expenses are required would become less attractive.

Our reform options suggest it is possible to make big gains in simplicity (allowing the vast majority of taxpayers to stop stuffing receipts into shoeboxes) while disadvantaging only a few and costing the budget nothing.The Conversation

John Minas, Senior Lecturer in Taxation, University of Tasmania and James Minas, Assistant Professor, School of Business, Ithaca College

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Christian Forced to Sell Kidney to Pay Debt to Boss in Pakistan


Employer charges non-Muslims at least 400 percent interest.

LAHORE, Pakistan, May 14 (CDN) — A low-wage Pakistani Christian said his Muslim employer last week forced him to sell his kidney in an effort to pay off a loan his boss made at exorbitant interest rates charged only to non-Muslims.

John Gill, a molding machine operator at Shah Plastic Manufacturers in the Youhanabad area of Lahore, said he took a loan of 150,000 rupees (US$1,766) – at 400 percent interest – from employer Ghulam Mustafa in 2007 in order to send his 17-year-old daughter to college. 

“I kept paying the installments every month from my salary, but after three years I got tired of paying the huge interest on the loan,” Gill told Compass.

The employer denied that he had received payment installments from his Christian worker, although Gill said he had receipts for monthly payments.

Mustafa confirmed that he took over Gill’s home last week after giving the Christian two weeks to pay off the outstanding interest on the loan. Then, on May 6, Mustafa came to Gill’s home with “about five armed men” and transported him to Ganga Ram hospital, where they forced him to sell his kidney against his will, the Christian said.

“They sold my kidney and said that they will come next month for the rest of the money,” Gill said.

The value of the kidney was estimated at around 200,000 rupees (US$2,380), leaving Gill with outstanding debt of about 250,000 rupees (US$2,976), he said. Recovering at home, Gill said he did not know he would repay the rest of the debt.

Mustafa told Compass that Gill owed him 400 percent interest on the loan.

“I only offer 50 percent interest to Muslim employees,” he said, adding that he refused to take less than 400 percent interest from any non-Muslim.

‘Kidney Bazaar’

There was no immediate confirmation from Ganga Ram hospital. Rights groups, however, have complained that hundreds of rich foreigners come to Pakistan every year to buy kidneys from live, impoverished donors.

Kidney failure is increasingly common in rich countries, often because of obesity or hypertension, but a growing shortage of transplant organs has fueled a black market that exploits needy donors such as Gill and risks undermining voluntary donation schemes, according to Pakistan’s Kidney Foundation.

Pakistani legislation aimed at curbing trafficking in human kidneys has not ended a business that has turned the country into the world’s “kidney bazaar,” critics say.

Gill said he is trying to contact local Christian advocacy groups to help him recover and overcome his financial and spiritual difficulties. Christians are a minority in heavily Islamic Pakistan, where rights groups have lamented discrimination against Christian workers.

Report from Compass Direct News