Government Reviews Tax Deductibility Of Non-Compulsory Work Clothes

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The federal government is reviewing the rules and regulatory requirements in the tax act, which deals with tax deductions for expenses for non-compulsory uniforms.

The Treasury paper gives several options for change from revamping the guidelines to outright denying all tax deductions. Scrapping the tax deductions would deliver the government an extra $30 million in annual revenue.

Stopping the deductions would also mean the Department of Industry, Innovation and Science administration would not incur costs in assessing and registering designs that fall within claimable deductions, which costs about $100,000 annually. Some of the occupations that make up 40 per cent of the claims are office workers, teachers, sales and marketing, nurses, health workers and carers.

The current rules specify that employees can only claim a tax deduction for non-compulsory uniform expenses, where employers have the uniform designs approved and entered on the Register of Approved Occupational Clothing by the Secretary of the Department of Industry, Innovation and Science.

“The review will consider whether the current arrangements remain fit-for-purpose, necessary and relevant and alternative options,” the consultation paper says, calling for submissions by December 16. The objective of section of the tax act was to only allow deductions for non-compulsory uniforms in cases where the clothing is clearly identifiable as a corporate wardrobe.

We will update you if any changes do occur.