A day after Prime Minister Anthony Albanese unveiled a $1,000 instant tax deduction for work-related expenses, the accounting community is pushing back.
Billed as a major simplification of the tax process, the measure could provide up to six million Australians with the option to bypass receipts and claim a flat deduction.
But the plan has ruffled some feathers.
CPA Australia’s Tax Lead Jenny Wong said the organisation does not support the idea, warning that taxpayers could lose out.
“Allowing taxpayers to choose to claim a $1,000 instant tax deduction instead of claiming individual work-related expenses may save some workers a bit of time—but could mean they miss out on the full refund they are entitled to,” she said.
Wong also argued the policy is inefficient, noting that past modelling shows standard deductions could cost more than they deliver in revenue, while unfairly benefiting people with no legitimate expenses.
“Taxpayers should be encouraged to take greater responsibility for their finances and tax obligations. Clicking a few buttons to get a basic deduction may be easy, but it is unlikely to be in the best interests of taxpayers or the economy,” she said.
Chartered Accountants Australia and New Zealand echoed the sentiment, reminding Australians that not all deductions are covered by the new rule.
“The standard deduction only relates to expenses associated with labour, so those taxpayers who also earn business income, rental income, interest and dividends ... will need to keep their receipts,” the organisation said.
A Simpler System Or a Risky Shortcut?
Despite the criticism, some economists are backing the reform.George Washington University Professor Steven Hamilton described the move as a win for efficiency and a cost saver for the tax office.
“The ATO has to spend a lot of money policing those deductions, and it’s just simpler for everybody,” he said.
“It’s a great example of how making our tax system simpler and more straightforward can lift a big weight off of the economy.”
Albanese framed the measure as a fairness fix for workers who often miss out on deductions.
“Every year, millions of people who work part-time, or work from home, or don’t have an accountant... pay more tax than they should,” he said.
“This reform fixes that—and it fixes it forever. It takes away the hassle of tracking your expenses, especially if you work from home. And it gives you back more of your own money, faster.”
Labor says taxpayers will still have the option to itemise expenses if their deductions exceed $1,000, but accountants argue that many Australians may not realise when that’s the case, potentially leaving money on the table.
