Exclusive - MPs claim the most work-related tax deductions
Australia’s politicians, state governors and local councillors claimed six times as much in work-related tax deductions than the national average of every other occupation in the country, Australian Tax Office data shows.
But the Albanese government has no plans to wind back generous rules that allow MPs who maintain a Canberra residence to claim the cost on their tax return. In 2016, Labor said the practice did not meet community standards.
There were 4256 legislators who submitted tax returns in financial 2020 with each individual taxpayer claiming an average of $8974 in work-related expense deductions, an analysis of Tax Office data by The Australian Financial Review has found.
That amount is more than six times higher than the national average of $1446 and more than all of the 438 other occupation groups.
The cohort of legislators includes 782 members of state and federal parliaments, 3454 local councillors and 20 current and former state governors.
MPs reported an average total income of $273,363 to the ATO in the year ended June 2020. State governors earned $310,355 on average, while councillors made do with a more modest income of $72,854.
The average state or federal MP recorded a $46,817 gap between their average total income and average taxable income in 2019-20, which was the highest among the 1154 specific occupations included in the Tax Office’s annual tax statistics.
The gap could reflect a combination of deductions, losses from earlier tax years, and payments that are not considered assessable income, like exempt income and non-assessable non-exempt income.
After legislators, the next most prolific claimants of work-related tax deductions were surgeons, who claimed $7041, and other medical practitioners, who claimed $6800 on average.
By contrast, the average fast food cook claimed $245 in work-related expenses while the average cashier claimed $364 in deductions.
Federal MPs receive a base salary of $217,060 as well as a $32,000 annual electorate allowance, which is a taxable payment covering incidental expenditure incurred while discharging electorate responsibilities.
They can also choose to receive a private plated vehicle or a $19,500 annual payment known as an electorate allowance.
Frequent flyers
Legislators claimed more “other related work expenses” than any of the 439 broadly defined occupation groups. The average legislator claimed $6424 in other work-related expenses in 2019-20, compared with the national average of $72.
The elevated level of claims likely reflects the section 328Q provision within a 1999 ATO ruling that allows MPs who maintain a second residence in Canberra to claim the cost of rent or interest on their tax return, while still receiving a travel allowance. Such an expense is considered an “other work-related deduction”, according to the ATO.
In 2016, then shadow treasurer Chris Bowen described the practice of receiving a travel allowance and claiming the cost of a second residence as failing to meet community standards. “This needs to change going forward,” he said.
Labor has no immediate plans to change work-related expenses for politicians.
Federal MPs receive travel allowances when they are on the road. The payment is tax-exempt provided the MP does not double-dip by claiming their travel-related expenses in their tax return, according to the ATO.
A backbencher receives $291 per day when they are travelling to Canberra, according to the remuneration tribunal. A daily allowance of $415 is paid on a trip to Sydney, $409 in Perth, $392 in Melbourne and $421 in Brisbane.
Legislators were the fifth-highest claimants of work-related travel expenses. Legislators claimed an average of $1002 per person in 2019-20, compared with the national average of $120. The only occupation groups that claimed more work-related travel expenses were air transport professionals, travel attendants, truck drivers and railway track workers.
The average legislator earned $14,619 in allowances, earnings, tips and directors’ fees, which was more than any other occupation group and well above the national average of $950.
Guard dogs aren’t deductible
What MPs can and cannot claim is governed by a 23-year-old ATO ruling. It states that almost all parliamentary allowances should be returned as assessable income, except for travel allowances.
The ATO provides a detailed guide on the deductibility of “commonly encountered” expenses ranging from maintaining a guard dog to the cost of food purchased at a fête.
Members of parliament cannot claim expenses related to childcare, laundry, “conventional” clothing, club membership, driver’s licence renewal, most entertainment expenses, expenses incurred during the period between being elected and taking their seat, fines, food or clothing purchased at fêtes, glasses, grooming, maintaining a guard dog, maintaining a private residence, meals, travel between home and work, relocation expenses, or installing a security system at home.
Provided they can demonstrate a connection to their work, politicians can claim a deduction for a briefcase, membership of a community group, airport lounge membership, depreciation on a computer, the cost of attending a conference, charitable donations, election expenses, “light refreshments” at a morning or afternoon tea for staff and use of public transport.
They can also claim deductions for prizes donated and presented at a function, home office expenses, some internet costs, some legal expenses, newspapers, political party membership, patron expenses, depreciation of a professional library, raffle tickets, self-education expenses, stationery, journal subscriptions and annual fees for trade associations.
Exclusive MPs claim the most work-related tax deductions
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