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Accountants have voiced their support for Labor’s $1,000 standard deduction following criticisms against the measure by accounting bodies.
$1k deduction to eliminate hours of ‘low-margin, high-risk work’, accountants say
17 April 2025
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8 minute read
Some accountants are voicing support for Labor’s $1,000 instant tax deduction pledge, saying the election promise could free up precious time for overwhelmed agents.
Following previous reports, Labor’s announcement to introduce a standard deduction received mixed reviews from the professional bodies, small business owners and sole practitioners.
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CA ANZ and the Institute of Public Accountants previously raised concerns that the $1,000 instant tax deduction would see clients miss out on conversations with their accountant, leading to potential consequences in the future.
However, Natalie Lennon, founder of Two Sides Accounting, and James Scott, founder of JD Scott & Co Chartered Accountants, disagreed with these views shared by the professional accounting bodies.
In a post to LinkedIn yesterday morning, Lennon called for others to share their opinions on the deductions, revealing that she welcomed the $1,000 deduction and simplification of the tax return process.
Lennon made the point that other countries such as the UK and New Zealand had automated tax returns which appeared to be both efficient and effective.
“I am probably going against the grain here when I say I welcome this and more simplification of individual tax returns in Australia,” she said.
“If New Zealand and the UK can automate the tax return process for most taxpayers, why can’t we?
“Your average accountant these days does not want to take on new individual tax return clients, as the compliance makes it hard to make money on them. It may seem like a simple/form-filling process, however, we are required to ensure we have asked a set of questions to obtain all relevant income for your return and audit activity is high.”
It was also noted that often completing tax returns for clients was a waste of time, as agents could never charge clients a sustainable and suitable rate.
Lennon’s post attracted multiple comments, with many agreeing that the introduction of the deduction would save accountants precious time and money.
Scott supported Lennon’s view and stated that if other countries could implement and manage it, then there was no reason that Australia couldn’t too.
According to Scott, the opposing opinions to this measure added to why tax reform was never approached, attempted or achieved.
This is actual reform that should free up hundreds of accountants from doing returns and have them focus on something more productive, like helping businesses, Scott said.
“We, the accounting profession, have been complaining for years about the need for tax reform. About the lack of people going into the profession. About the rising compliance burden. And yet – as soon as an election promise is made that might help matters, we get reactions like this,” he said.
“The professional bodies should be supporting, not hindering, changes. It [a standard deduction] also frees up millions of hours of accountants’ time to do more productive work, like helping their business clients grow. Personal income tax returns are low-margin, high-risk work that takes up millions of hours.”
Despite raising concerns about the deduction, CA ANZ said it wanted to reiterate that the standard deduction proposed by Labor would be welcomed by taxpayers with simple tax affairs.
“It is important to note that many taxpayers have work-related claims that are larger than $1000. These people and the tax agents who support them, should not ditch the receipts just yet," CA ANZ said.
“CA ANZ cautions that simplicity should not come with any unintended costs to some taxpayers.”
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