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Is the tax system holding women back?

The Australian Tax Office needs to apply a greater female lens across the tax system so that women are not being held back when it comes to claims.

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The Australian Tax Office needs to apply a greater female lens across the tax system so that women are not penalised for returning to work or making claims for deductions.

As it stands many of the details within the tax system that apply to working women are based on older working man-based models.

For instance, the term briefcase is still referred to instead of handbags – working women don’t use briefcases.

Sunscreens may be tax deductible but a growing number of products targeted at working women such as tinted sunscreens and sun-protection makeups, SPF lip balms or lipsticks even those with the equivalent levels of SPF, lack clarity and need updating to reflect the way women actually wear these products.

And then of course there are family tax benefits and despite the gender pay gap, a woman’s salary – or none – is lumped with her partner’s. The same applies to stay-at-home Dads or those men earning less than their partner.

Women With Cents founder Natasha Janssens also notes that another grey area for professional women is around the need to maintain their professional knowledge while on extended leave or maternity leave.

“While you currently can claim professional memberships while on maternity leave it is not commonly known and is addressed by a special ATO ruling on a case by case basis,” she said.

Now in a new paper titled, Gender equity in the tax-transfer system for fiscal sustainability by University of Sydney Professor Patricia Apps, she questions whether women are actually being discriminated against because tax rules are desperately in need of updating.

According to Professor Apps the tax system doesn’t recognise the work of stay-at-home parents, which are predominately women, it therefore taxes many women higher by grouping their eligibility for family payments for dependent children on the basis of joint income.

Yet we know that many partnered women still see the cost of “largely privatised” childcare as coming out of their pay, rather than the family income.

In addition, “women, typically on lower pay, cannot gain equally from tax advantaged superannuation,” notes Professor Apps.

The same report provides an example from Professor Apps, where a woman earns $50,000 and her partner $60,000. Yet the woman will lose Family Tax Benefit Part A and Part B once joint incomes are taken into account.

Together with the tax on her income this gives her a tax bill of more than $22,000 and an effective average tax rate of more than 42 per cent.

It’s a tax system in need of review to not just take into account the inequity that applies to many women with pay and tax, but families where women earn more, and stay-at-home Dads as well.

Here’s a quick video from Sugar Mamma TV on ways that you can make the most of your tax refund this year.

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