You would be aware that in the President’s Report May 5th 2008 I wrote about a number of issues of concern. Key amongst these is the need to address the tax deductability of career check-ups. I expressed these concerns to the Rudd Government. The report is located on our web site at www.cdaa.org.au/node/1889
I have now received a response letter from the Departmental Liaison Officer (Taxation), Office of the Treasurer, dated 5th November 2008 on the issue of allowable deductions for employee “career check-ups”.
The response is documented below:
“With respect to tax deductions, it is a general principle of the tax law for a deduction to be allowed there needs to be an essential connection between the expense and the individual’s income producing activities. This means that the expenditure must be incurred as part of the operations by which the taxpayer earns income.
Where expenses are incurred to enable a taxpayer to become employed, to obtain new employment or to open up a new income-earning activity (even in the taxpayer’s present employment) the general rule will not be satisfied. The expenses incurred will not be deductible because they are incurred at a point too soon to be regarded as incurred in gaining or producing assessable income.
This treatment of “career checkups” is in line with the longstanding principle of the income tax law that a deduction is only available for an expense directly incurred in gaining assessable income.
It is worth bearing in mind allowing a tax deduction in this situation would provide greatest benefit to high-income earners and little to low-income earners.
The Treasurer announced in 2008-09 Budget that the Government will conduct a comprehensive review of Australia’s tax system to create a structure that positions Australia to deal with the demographic, social, economic and environmental challenges of the 21st century.
The review Panel wants to ensure views and ideas from a wide cross-section of the community are considered and your input will help us achieve this goal.
As the issue you have raised falls within the scope of the review, I have forwarded your correspondence top the Review Panel for their consideration (Departmental Liaison Officer (Taxation), Office of the Treasurer)”.
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As the review progresses there will be an opportunity for public submissions and public meetings on issues and options for reform, with the Review Panel due to provide its final report to the Treasurer by the end of 2009.
I urge you to take advantage of this opportunity to participate and to further the issues I have raised.
In order to assist employees I proposed a number of possible recommendations for the Government’s consideration:
- A slight amendment to the Australian Taxation Office (ATO) tax ruling TR 98/9 to allow, “career check-up” to be a tax deduction. At present if a client sees a career development practitioner to better his/her existing position then it is an “allowable allowance”, however if a client sees a practitioner to assist them get a job, new job, to assist them change employment or help clients manage their career, it is not an allowable tax deduction.
- Medicare refund for employees seeking advice from a qualified career development practitioner. This might include career counselling, coaching or other appropriate career development services.
- Centrelink could provide unemployed clients with a means tested allowance (eg $1,000 per year) to seek career development support from professional career development practitioners.
Further, Private Health Fund providers could allow members to claim against the “living welll program” allowance. At present health funds provide up to $200 a year (some $500) for “living well programs”. Health Fund members could be allowed to seek career development support/advice and include visits to a qualified career development practitioner as a claim on their health fund.
Investing in career development services and information products might be the national investment strategy to enable full participation in the twenty-first century workplace.
As a Career Development Practitioner we know that when we, “explore, dream, discover”[1], work can be more than just work.
For more information on the review, including how you can make a formal submission, please visit www.taxreview.treasury.gov.au or call 1800 624 133.
Dr Peter Carey
National President, CDAA
1. Mark Twain |
