|28 June 2000 - FLAT RATE OF TAX DEDUCTION FOR RURAL WORKERS TO CONTINUE
The National Farmers' Federation has today confirmed with the Australian Taxation Office that tax instalments at a flat rate can be deducted from the wages of shearers, shed staff and itinerant fruit and vegetable pickers.
Chairman of NFF's Industrial Committee, Alan Bowman, said that confirmation of the extension of the system was appropriate and welcome.
"The ATO has recognised that a flat rate of taxation being deducted from certain classes of largely seasonal workers is going to assist them financially, as well as reduce farmers' administrative costs," Mr Bowman said
"In line with overall tax rate reductions under the New Tax System, the flat rate will be 13 per cent from 1 July 2000, a change from 15 per cent in previous financial years.
"The change to a lower rate reflects the adjustment of personal income tax rates partly introduced to compensate for the GST," he said.
"However, we must not lose sight of the fact that employees can ask to have a higher percentage rate deducted from their wages.
"We understand that the rate of 13 per cent is based on ATO modelling that looked at current reported earnings in the industries. The model is designed for those workers who earn less than $25,000. Those workers who earn $25,000 or more, or those who currently have to pay tax at the end of the year, should make an individual decision as to whether they should apply for a higher rate of tax to be deducted," Mr Bowman said.
"Generally, for workers in the categories covered by these arrangements, the tax deducted reflects their final liability, and is therefore a scheme that is right for agricultural workers," he concluded.
Income tax: what types of protective clothing and footwear are shearers entitled to deduct as work related expenses under subsection 51(1) of the Income Tax Assessment Act 1936?
1. Shearers are entitled to deductions only for those items of clothing and footwear which protect against the hazards of their occupation. Those items are designed specifically for the occupation.
2. Protective clothing is clothing specifically designed to protect:
(a) the taxpayer from personal work injury (e.g. steel cap boots or safety helmets); or
(b) the taxpayer's conventional clothing from the hazard of his/her work environment (e.g. overalls or apron, when appropriate for the occupation).
3. Examples of protective clothing and footwear for shearers would include:
Shearers' Jeans or Dungarees: jeans which have a double thickness of material over the front and lower back leg. They are made from a special nylon/cotton mixture which helps repel the lanolin and grease from the fleece so as to protect against infections.
Shearers' Singlets: singlets with leather patches under the arms where the sheep are held during shearing, again to protect against infection from lanolin and grease.
Shearers' boots: boots with lacing across the front and/or a flap to prevent wool clippings getting inside the boot.
Shearers'Moccasins: a specialty item which has a non-slip coating on the sole to prevent slipping on grease in the shearing sheds.
4. The clothing is specially made to repel the lanolin and grease from the fleeces as the grease can frequently cause skin irritations such as infections and skin rashes. Such clothing is therefore protecting the shearers from personal work injury and is specific and unique to the occupation.
5. Section 51AL discusses clothing which is non-compulsory, however as the clothing is protective in nature, it is not excluded from deductibility by section 51AL(4): non-compulsory uniform/wardrobe.
A shearer has claimed for singlets and jeans worn for work purposes. Examination of the receipts provided by the taxpayer shows that the clothing was not designed specifically for shearers. Further enquiries showed that the special detailing required to make the clothing protective (double thickness of special material for the jeans, and no leather patching under the arms) has not been done. Therefore the claim is not an allowable deduction as the clothing is not protective but conventional in nature.
A shearer claims singlets, protective footwear and trousers worn at work. Examination of the receipts show that the purchases were made for 'shearers' jeans', singlets and moccasins. Enquiries to the retailer reveal that the items are similar to the examples of protective clothing described in paragraph 3 above. These claims are allowable deductions. The items are specifically designed for the occupation and are protective in nature.