The expression “work related expenses” (WRE) is a label which refers to expenses claimed by an employee to be deductible on the basis that they are incurred in producing their employment income. By their very nature they are not expenses that the employer chooses to pick up. Common examples include travel expenses to a conference, uniform expenses, home office expenses, self-education expenses and car expenses that extend beyond going to and from work.
The ATO released statistics on WRE as part of a broad release of tax information for the 2013-14 year on 18 March 2016. These statistics reveal that men claim about $6.6 billion more in expenses than women.
This is due to three reasons.
Firstly, approximately 8 percent of the difference is due to the fact that there are a lower number of female employees. There are about 5.0 million women and 5.3 million men in employment. This explains around $0.5 billion of the $6.6 billion difference.
Secondly, approximately 64 percent of the difference is due to the fact that men and women do not earn equally. Most of this would be explained by the fact that many more women are in part time employment, but there are certainly other factors. The average salary for women is about $44,000 while the average salary for men is $68,000. This explains about $4.2 billion of the difference.
Thirdly, the remaining 28 percent, or $1.8 billion, must be due to one of two factors. Either the jobs in which men predominate are more conducive to WRE or men are more aggressive in claiming such expenses. My personal view is that it is largely the latter. One could think about this differently and say that if women made the same level of claim per $1000 of salary as men, their claims would be 17 percent higher.
The average amount of WRE claims per female employee is $1,430. For men it is $2,563. So the average of total WRE claims for men is 79 percent more than for women, even though the average salary for men is only 55 percent more than for women.
Men tend to make more WRE claims. On average, women makes 1.6 claims per employee. It is 1.9 claims per employee for men. The average amount of WRE claimed per $1000 of salary is also greater for men than women. It is $32 for women and $37 for men.
The ATO statistics break down WRE into 5 categories (i) car, (ii) travel, (iii) clothing, (iv) self-education and (v) other, which includes home office expenses and tools.
If one looks at the WRE claims on a per salaried person basis, then the amount of claims by men exceed those by women in each category. For travel, the amount claimed per salaried male is 221 percent that claimed for the average salaried women. For clothing the difference is only 35 percent, while it is line ball for self-education expenses.
This picture is broadly maintained if one considers WREs on a per claim basis. For travel, the amount claimed for men is 143 percent greater than that for women per claim. This falls to a differential in favour of men for self-education of only 14 percent and for clothing of 13 percent.
It is only when one looks at the amount claimed per $1000 of salary, that one finds categories where women exceed men on WREs. These are self-education expenses, where women spend $2.50 for every $1000 earned in salary while men spend $1.60, and clothing, where women spend $3.10 for every $1000 earned while men spend $2.70. For travel, by contrast, men spend $4.40 for every $1000 earned, while women only spend $2.10. Men also spend more per $1000 of salary on cars and the other category. Overall men spend 17 percent more on WREs per $1000 of salary than women.
In considering these statistics, one needs to remember that WREs are expenses claimed by an employee that the employer does not think it appropriate to pay. In the realm of travel where there are significantly greater claims by males on any criteria, there are high levels of “discretion” on the claims as to what is work-related and what is private. The same can be said for car expenses which are not reimbursed by the employer.
There appears to be less discretion on a claim for fees for education expenses, where women claim more per $1000 of salary, although not on a per claim basis or per salaried person basis.
That suggests that men are more aggressive in their claims.
Sitting beside this is another dimension. A doctor can claim travel expenses to Vienna for a conference which he or she may personally incur, even though the employer is unwilling to pay for such an expense. By contrast, a parent who needs to pay for childcare in order to be able to work in a very real and practical sense, cannot claim the childcare costs as a deductible expense. The reason is that for the childcare costs are considered to be in the “private” domain, whereas the flight to Vienna is not, at least under our tax law, essentially “private”.
Historically, in our tax law, a business lunch has not been considered to be essentially private, although we have had tax rules since the mid-1980s to address the inequity of this. What is “private”?
Well I am not sure what Charles Dodgson would have thought about our taxation laws, but his thoughts on language are certainly apt.
When I use a word,” Humpty Dumpty said in rather a scornful tone, “it means just what I choose it to mean — neither more nor less.”
“The question is,” said Alice, “whether you can make words mean so many different things.”
“The question is,” said Humpty Dumpty, “which is to be master – that’s all.”