ATO Taxation Statistics show that in 2016-17 there were more than 8.84 million people claiming $21.98 billion in work-related expense deductions.

The IGT has also raised concerns that the Australian Taxation Office's current online tools aimed at nudging taxpayers to amend their returns if they are out of sync with their nearest neighbour, could be possibly resulting in people under-claiming on their tax returns.

Both major parties have considered the idea of a standard tax deduction in the past, but it has never been legislated due to the high cost.

Following the 2010 Henry tax review recommendation that it be considered, former treasurer Wayne Swan announced that the Rudd Government would grant a standard tax deduction and this would end in a bigger tax return for 6.4 million Australians. But the proposed legislation was never introduced into Parliament.

Then, when Scott Morrison was Treasurer, he asked a parliamentary inquiry to look into the possibility of introducing a standard deduction for all taxpayers or doing away with certain deductions in favour of lower personal tax rates.

But the 2017 Standing Committee on Economics report of its Inquiry into Tax Deductibility found the cost of such a scheme would be significant.

It found that if a standard deduction of $500 was granted, there would be an additional cost of $2.3 billion, and if the standard deduction was increased to $1,000, then the additional cost would be $4.6 billion.

Acting inspector-general of taxation Andrew McLoughlin said, while there was presently little appetite for change, a change should still be considered as there could be compliance cost savings for individuals and reduced administrative costs for the ATO. He called for a cost-benefit analysis to progress the debate.

In his response to the IGT review, Assistant Treasurer Stuart Robert said a long-standing principle of the Australian tax system was to tax an individual on their income "after accounting for legitimate costs incurred in earning that income".

But he but noted the ATO had taken steps to make compliance easier for individuals with work-related expenses, such the myDeductions app.