New analysis from the Australia Institute shows a small minority of individuals are spending big on tax accountants to take advantage of unfair tax loopholes, such that individuals with a gross income over $1 million can pay zero tax.
Key Findings:
- Those with both a gross and taxable income over $1 million spent on average $7,476 on managing their tax affairs
- Those with a gross income over $1 million but had reduced their taxable income to under $1 million spent $26,124
- Those with a gross income over $1 million but enough deductions to reduce their taxable income below the tax-free threshold, i.e. gross income over $1 million but paid zero tax, paid a whopping $174,201 on managing their tax affairs. This is 23 times more than those whose taxable income stayed above $1 million.
"What these taxation statistics show us is that most people who pay for help managing their tax affairs spend a few hundred dollars, but there is a very small minority who are spending considerable sums of money to manage their tax affairs," says Matt Grudnoff, senior economist at the Australia Institute.
"These people are more likely to have large gross incomes and some of them have been very successful in reducing the amount of tax they pay.
"When these unfair tax loopholes, such as refunding excess franking credits are rorted by weathy individuals they should be closed as soon as possible.
"Doing so will not only make the taxation system fairer and more progressive, it will also discourage the largely unproductive industry focusing on finding and using complex tax loopholes."
