Sixty-nine Australians were lucky enough to earn more than a million dollars in the 2016-17 financial year but somehow ended up paying zero income tax.
After the Australian Taxation Office released a batch of data on Friday, the ABC first reported that 60 people reported a total income of more than $1,000,000 – but after various deductions – had reduced their taxable income to below $6,001.
Along with nine others that deducted their way below the $18,200 tax-free bracket, they formed an exclusive group of millionaires that paid no tax.
This also meant that none of them paid the Medicare Levy.
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The no-tax millionaire club has grown, with 62 meeting the criteria for the 2015-16 financial year.
While many deductions were made for gifts and donations, much of the taxable income reduction came out of “cost of managing tax affairs”. These are costs to help you lodge a tax return, use a tax agent or advisor and court costs for tax cases.
To close this loophole, opposition leader Bill Shorten announced in his 2017 budget reply speech that his Labor Party would cap the deductions for tax management.
“The days of earning millions and paying nothing, are over – no matter who you are… Loopholes for millionaires means middle Australia pays more,” he said.
“That’s why a Labor Government will cap the amount individuals can deduct for the management of their tax affairs at $3000. This affects fewer than 1 in 100 taxpayers and will save the budget $1.3 billion over the medium-term.”
Understandably accountant industry bodies, like the Institute of Public Accountants, has campaigned against this cap, arguing it’s easy enough for the ATO to audit 60-odd individuals and the rest of the population should suffer from a cap.
“The likely scenario is when a client gets to a bill of $3000 they say, ‘stop providing me services’,” IPA president Andrew Conway told Fairfax Media earlier this year.
“That’s going to lead to a system that crumbles.”
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