Its costings show that the proposal will rake in $1.8 billion to 2028–29, and will only affect less than 1 per cent of all taxpayers, roughly 90,000.

The proposal covers expenses relating to preparing and lodging tax returns and activity statements that include the costs of lodging tax returns through a registered tax agent, obtaining tax advice from a recognised tax adviser, appealing to the Administrative Appeals Tribunal or courts in relation to tax affairs, interest charges by the ATO, and dealing with the ATO about tax affairs.

Speaking at the Tax Institute’s National Convention, ATO commissioner Chris Jordan said the millions that Labor point to were probably down to general interest charges in large settlements.

“When people see a quick headline, ‘millionaires paying millions not to pay tax’, there might well be some other reason entirely, like GIC, and I think we’re trying to break that box down now,” Mr Jordan said.

“For this one, it is the label on the tax return and in that label, it is not just tax agent fees but penalties and deductible interest. If you’ve got all that GIC and you’ve paid an enormous settlement, you can claim the GIC as a tax deduction, so yes, you might have millions of dollars of income, but I can’t see any rational or even irrational person spending over a million to not pay tax on a million.

“Just like in the work-related expenses area, to give them a better feel to see what is the tax agent fee versus what is the big GIC, and it is the big GIC figure and settlement figures that drive these amounts, but again, policy is formed on a perception.”

The Tax Institute’s senior tax counsel, Professor Robert Deutsch, who previously labelled the proposal as “outrageous”, revealed that 87.6 per cent of its membership either disagreed or strongly disagreed with the proposal.

“It seems to me that measure has come about because there is a handful, perhaps two handfuls, of people who have done the wrong thing by overclaiming deductions in this space, and I think they need to be addressed head-on, but I don’t think it is fair to penalise the entire community by limiting deductions in this way to a particular figure,” Professor Deutsch said.