The Australian Taxation Office is being accused of misusing tax credits to help the middle-class.
Key points:The government is offering a refund of up to $10,000 to taxpayers earning less than $200,000A proposal to scrap the tax credit for people earning more than $500,000 has sparked anger from tax professionals and business ownersThe changes would apply to the middle and lower income earnersThe tax office says it will not change the existing refund amountThe proposals are designed to ease the burden on middle- and lower-income taxpayers, who can still use the tax rebate to pay for essential goods and services, such as food and petrol.
They come after the government announced the introduction of a new tax credit which will refund up to a maximum of $10 of a taxpayer’s income tax, if the taxpayer is earning less $200.
Under the changes, the tax bill would be deducted by the taxpayer in the same way as income tax.
However, the changes would not apply to any income below $200 if the tax is paid on the taxpayer’s own account, or if the amount paid is less than the amount in the income tax return.
It comes after an investigation by The Australian Financial Report into the tax credits and how they were being used by the tax office.
The government announced changes to the tax code to help lower and middle-paid Australians, and to encourage more people to start their own businesses.
Taxpayer numbers have been rising.
The tax code now has more than 10,000 different types of tax credits.
The new proposal will only be available for people who are earning between $200 and $400,000, with an annual income of $200 or more.
But the tax change could have the unintended consequence of hurting low-income and working-class Australians.
“These are people who have no savings, have been in work for longer than they’d like to, and they’ve done a lot of work and they’re struggling to make ends meet,” Mr Abbott said.
“And yet there’s a small percentage of people who can’t claim this benefit because of how much they earn.”‘
We’ve had to pay taxes for too long’The changes are the latest in a series of measures the government has made to address the growing income inequality in Australia.
Mr Abbott says he has made it a priority to ensure people have a “fair share of the pie”.
“In a country where more than 80 per cent of income is earned by a few, it is an issue of fairness,” he said.
The changes also aim to reduce the cost of the tax-free savings account, the child tax credit, and introduce a new concessional tax-exempt income test.
But critics say these measures will make it harder for the low and middle income earners to make a living and will make tax reporting easier for corporations and individuals.
The proposals were criticised by the Tax Law Centre (TLC), which represents professional tax lawyers, tax advisers and tax practitioners.
“We have seen an increase in the number of people claiming tax credits over the last couple of years,” TLC director of policy and legal advice David Murphy said.”[The government’s] proposals will have the effect of making it harder than ever to be an effective tax collector.”
People should not be forced to use tax credits when they simply don’t have enough money to do so.
“The TLC said the government was proposing to reduce and reduce tax credits, rather than provide an alternative, more efficient tax system.”
The proposed changes are likely to reduce income tax by tens of thousands of dollars, but it will also reduce the number who are able to claim the tax benefit,” TLG CEO David Jones said.
It’s been a busy week for the tax department, with a number of announcements including:The Department of Finance is changing the way it handles tax returns to help reduce errors.
Under its proposed changes, tax returns will now be returned as a set of receipts rather than a single document.
The department says the changes will be phased in over time, but the impact will be felt in the coming months.
The Office of Tax Simplification (OTSS) is also proposing changes to simplify the way income tax is assessed.
The OTSS is proposing to simplify its assessment of income tax to allow for simpler deductions.
The reforms will mean the amount of income subject to income tax will be reduced by up to 15 per cent, while the number to be claimed will be limited to the lower 50 per cent.
The OECD estimates the total cost of tax to the economy could be $20 billion a year by 2028.
Mr Murphy said the changes were not a solution to the problem of income inequality.”
In the short term, they’ll make the tax system less efficient and less fair, but over the long term they’re going to have an effect on how many people are able or willing to pay tax,” he told the ABC.”
If we want to solve the problem