Oh, it's hard to be a pollie now that tax time is near

Herald Sun on the subject of Australian federal politicians and the tax they don't pay, 29 May 2016:

THE NUMBERS

■ Average tax deduction for MPs: $49,058*

■ Average salary: $264,305

■ Number of MPs: 845

Source: Australian Taxation Office 2013-14

Last year, the average taxable income was $180,507 for 722 MPs who had lodged claims to date.

By reducing the taxable income to $180,000 they are not paying the deficit levy, the top tax rate of 45 cents in the dollar or the higher Medicare Levy which would apply to their actual salary of $221,828.

By bringing their taxable income under $180,000 they are reducing their tax by around $20,000-a-year when the deficit levy, Medicare levy and the top tax rate is taken into account.

Source: Australian Taxation Office 2014-15

WHAT MPS CAN CLAIM

■ Federal and state MPs can claim all the normal deductions available to workers including negative gearing of investment properties, car leases and work related deductions.

There are also some added extras only politicians can claim including election expenses, electorate allowances and buying a second property to live in when in Canberra.

■ Election expenses

You can claim a deduction for election expenses but if you claim a deduction for any election expense you must include the reimbursement as income on your tax return.

Deductions include:

— advertising and promotional expenses incurred during the election period;

costs of election-related opinion polls or other research undertaken during the election period;

— travel and accommodation costs associated with the campaign;

— wages paid to persons employed for campaign purposes; costs of campaign novelty items — car stickers, T-shirts, lapel buttons or badges, pens, pencils or balloons;

■ Electorate Allowance

Federal MPs get an “Electorate allowance” of $32,000 as part of their salary. MPs need receipts and any cash is treated as taxable income. Allowable include the cost of presentations at school speech days, buying raffle tickets, gifts to sporting clubs and community groups and senior citizens awards and other donations. For example, an MP who spent $20,000 would secure an effective tax deduction of $20,000.

■ Second property not used as a Member’s residence

MPs can choose to rent or buy a property rather than stay in a hotel or other commercial establishment when travelling. A deduction is allowable for expenses including lease payments; rent; interest on borrowings used for the acquisition of the property; rates; taxes; insurance; general maintenance of the building, plant and grounds. The ATO argues the same rules apply to other taxpayers but not many other workers would fly to Canberra for 20 weeks a year and get a $271 allowance to sleep in their own investment property. MPs can choose to take the allowance tax-free and not claim a tax deduction. MPs who believe the costs of the investment property are more than the travel allowance of around $1,000 a week when Parliament is sitting can claim a deduction but must declare the allowance as income. MPs only do that if they know their costs would reduce their taxable income by the same amount or more.