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Analysis: Politicians ignorant of real-world work expenses

Analysis: Politicians ignorant of real-world work expenses

Federal politicians are being criticised for failing to understand real-world finances, as they escape penalties for late lodgment and receive gratuitous expenses the likes of which business owners can only dream.

Just a day after being sworn in as Deputy Prime Minister, Michael McCormack faced allegations that he was using his parliamentary away-from-home allowance to pay “rent” on a Canberra property – owned by his wife.

Mr McCormack also allegedly failed to disclose the purchase of a Melbourne investment property in 2016 until the day he became Deputy PM.

“I was fined $1,760 by the ATO for lodging a BAS form two weeks late. Michael McCormack took 18 months to update his pecuniary interests register after investment house purchase in 2016. What will be his penalty?” said Twitter user Eddy Jokovich.

And, despite a spokesperson for the ATO telling My Business that politicians “have the same entitlements and responsibilities as other taxpayers”, politicians’ work expenses are not even seen by the tax office.

Instead, travel expenses of politicians and their staff go through the Independent Parliamentary Expenses Authority (IPEA), while a division of the Department of Finance oversees all other work-related claims.

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The IPEA alone covers 10 types of expenses politicians can claim for “work-related costs”, including overseas travel, car costs, office facilities, telecommunications and employee costs, as well as family travel costs and office administration costs.

“Any reimbursement of parliamentarian’s expenses is paid by IPEA directly to the parliamentarian (and not through the ATO),” a spokesperson said.

The situation reveals something of a disconnect between the everyday practices of politicians claiming expenses and the stringent rules the ATO places on all other taxpayers when making deductions.

How can politicians’ expenses be measured in line with the rest of the population if they are processed by different agencies?

How much cross-referencing do these separate agencies do to ensure politicians adhere to the rules?

Where is the line drawn between personal and work-related expenses for our political leaders, as demonstrated by the blurring of the lines in Mr McCormack’s alleged rort of the away-from-home allowance?

And, as Eddy Jokovich noted above, what penalties do politicians receive for not adhering to rules and deadlines, when business owners face substantial fines simply for lodging documents late?

While working for myself as a freelance journalist several years ago, I had my tax deductions – legitimate expenses for which I had receipts – denied because the ATO deemed my costs of doing business were “too high” for my level of income.

Particularly interesting when, going through the IPEA records, it is apparent most politicians claim expenses far beyond the value of their own salaries.

Surely a rethink is desperately needed when hard-working business owners are financially hammered by the tax man for honest mistakes or having slender margins, while those making the rules seem to enjoy a much easier ride.

If politicians really want to understand the workings of what they like to call “the backbone of the economy”, perhaps they should take a good hard look at how their own expenses claims and tax deductions compare with those of your typical Aussie business owner. 

 

 

Analysis: Politicians ignorant of real-world work expenses
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