Committee says scrap tax deductions 3:53pm 31.06.08

A report by the Joint Committee of Public Accounts has recommended that the Federal Government tax review scrap tax deductions for work-related expenses to reduce the need for people to lodge tax returns.

The committee says simplifying the tax system is possible by reducing the number of taxpayers who are required to lodge returns. They recommended the review consider:

* The costs and benefits of making work-related expenses deductible;

* Whether tax offsets, rebates and benefits should be delivered instead as direct welfare payments;

* Increasing the tax-free threshold and reducing the number of marginal rates;

* Improving the accuracy and coverage of withholding tax;

* Giving structural adjustment grants to tax agents made redundant by a simpler set of tax laws.

For many taxpayers, self-assessment was too complex, forcing them to seek professional help, which increased compliance costs. “A simpler system will deliver savings to both taxpayers and government, and allow entrepreneurs to focus on growing their business, rather than complying with arbitrary tax rules,” concluded the report.