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New businesses tipped to be hit by proposed cap

Parliament

Fresh fears have surfaced that Labor’s plans to implement a cap on the deductions Australians can claim for using an accountant will hit new businesses and migrants.

Professional association the Tax Institute has written to Opposition Leader Bill Shorten about his party’s plan to cap the deductibility of managing tax affairs to $3,000. 

This proposal has copped major backlash within the tax and SME community, which can be read in full here.

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In his letter, president of the Tax Institute Tim Neilson said that the proposal was “ill-informed” and will have a detrimental impact on the business community. 

There are many examples, he said, where individuals will need more than $3,000 of assistance.

“Someone considering making the leap of faith to create a new business, which may in time provide employment and prosperity to many other Australians, will need extensive advice on the tax consequences of all aspects of that decision,” he said.

“People with foreign income or assets, [such as] migrants, need to address aspects of tax law that are complex even by the standards of the tax regime in general.”

Australians facing difficult circumstances, like divorce or a death in the family, also often need to fork out for specialist help during a rough period. 

“The work of qualified tax professionals is an essential part of Australia’s tax system, as has been recognised for many years, especially since the advent of the self-assessment regime,” he said.

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“Tax deductibility of advice in complying with tax laws is a legitimate expense of business, investment or other income-earning activities. We utterly reject the notion that an open, express and long-standing right to a tax deduction for costs in complying with laws imposed by government is a rort, and strongly oppose a de facto tax increase by restriction of that right.”

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New businesses tipped to be hit by proposed cap
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