Too taxing: reducing red tape

Expand foreign income reporting labels: add deductions label

Currently, labels on the income tax returns for reporting foreign income contain only "net income" and "gross income" for various income types. This hides the amount of deductions claimed against foreign income, and in case of individuals - against each income type. It also appears to overly complicate the reporting because the deductions need to be apportioned from D labels for individuals and/or subtracted from income before entering numbers at item 20 on the individual income tax return.

 

It may be more pragmatic and transparent to report gross foreign income, then report deductions in relation to this income in a set of separate labels and a net figure to be included in assessable income reported in its own label. This is the approach taken to virtually all other income types, consider dividend income at item 11 and dividend deductions at item D8. Which is as simple as Assessable Income - Deductions = Taxable Income.

 

This will increase transparency and readability of the income tax returns and eliminate a set of "hidden" deductions due to the reporting of net income figures.

 

Attached are images of relevant items on individual and SMSF income tax returns.

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Idea No. 67