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Clint Harding responds to proposed cap on deductions for managing tax affairs

Taxation
Clint Harding responds to proposed cap on deductions for managing tax affairs
Arnold Bloch Leibler Taxation Partner, Clint Harding, has told the Australian Financial Review he is concerned about a proposed cap on the amount that can be claimed for receiving tax advice, in particular, the effect it would have on access to the legal system by individuals.

The federal Opposition recently announced plans to limit to $3000 the amount that could be claimed for ‘managing tax affairs’, which Clint says is concerning: “The range of expenses that actually fall into the category of managing tax affairs is in fact very broad and includes interest and certain charges imposed by the Australian Taxation Office, costs associated with preparing returns and costs associated with dealing with ATO audits and reviews and any disputes.

“One of my principal concerns, and one that I think will be shared by many in the legal profession, is that the measure will have an adverse impact on access to the Australian legal system and on the willingness and ability of taxpayers to dispute contentious tax issues in the Tribunal or the courts. It will cost taxpayers affected by the measure significantly more to dispute any action taken or position adopted by the Australian Taxation Office.  That, in turn, may also mean that important issues worthy of judicial consideration do not reach the courts.”

Clint argues that if there is to be a cap placed on the cost of managing one’s tax affairs, the government of the day would need to seriously commit to an extensive program of tax simplification.

Pointing to Labor’s planned changes to trusts law and negative gearing, Clint told the AFR’s Joanna Mather: "I think it is disingenuous to suggest that taxpayers are spending too much on managing their tax affairs and at the same time propose a series of tax reforms that will force a large number of taxpayers to engage advisers to help them understand these new rules and to explain how they might be impacted.

"Properly considered and executed tax reform, which can include closing any so-called loopholes that we are told taxpayers are exploiting, is in all respects a better way to proceed."

To read the full AFR article, click here.

"The measure will have an adverse impact on access to the Australian legal system and on the willingness and ability of taxpayers to dispute contentious tax issues in the Tribunal or the courts."

Clint Harding, Arnold Bloch Leibler Partner