The Australia Institute think tank has backed a plan by Labor to limit deductions for the cost of managing tax affairs to $3,000.

Under current tax laws, individuals can claim all their expenses related to managing taxation, such as accountancy and legal fees, software costs and the like.

The 2014-15 statistics from the Australian Taxation Office showed more than $2.3 billion in deductions were claimed for managing tax affairs.

Analysis of the ATO statistics by The Australia Institute found that less than half (47 per cent) of taxpayers claimed a deduction for getting assistance to manage their tax affairs.

Presumably the majority used the ATO's online e-tax system without professional help.

Of those who did claim a deduction, the average amount was $378, but the median was just $165.

That indicates that a relatively small group are making much larger deductions, pulling the average higher.

The Australia Institute's analysis showed that those earning more than a million dollars claimed an average $12,657 in deductions for help managing their tax affairs.

The average amount claimed dropped off sharply from there as incomes declined.

High earners claim vastly more tax advice deductions

Those earning more than a million dollars a year claim almost four times as much as any other income group. ( Supplied: The Australia Institute/ATO )

The institute's senior economist, Matt Grudnoff, told RN Breakfast that this was inequitable in two different ways.

"There are a number of people who earnt more than a million dollars who paid no tax and, of that group, they were deducting in excess of a million dollars each to manage their tax affairs," he said.

"The vast majority of Australians don't have the resources to hire a team of accounts to find those loopholes in order to minimise their tax."

The Labor proposal is expected to affect around 90,000 taxpayers, which is only 1 per cent of the total, but still raise just short of $2 billion over a decade.

Mr Grudnoff said, aside from improving fairness in the tax system, a cap on tax advice deductions might also help reduce the economically inefficient allocation of resources to tax minimisation.

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"They hire very clever people and they spend money and their entire job is basically to minimise their tax," he said.

"These people aren't producing anything of particular value in the economy and these people are spending large amounts of resources just to reduce their tax.

"It'd be far better from a societal point of view if these very clever people were out doing something more productive and these very rich people were paying their fair share of tax."

Accountants defend 'tax planning opportunities'

A major accounting body has defended its members, and their clients' rights to use legal means to minimise tax.

Michael Croker, the tax leader at Chartered Accountants Australia and New Zealand (CA ANZ), said groups critical of tax loopholes should advocate closing them rather than limiting deductions for people's legitimate tax planning.

"If civil society groups have concerns about tax planning opportunities which exist under the law, they should advocate for changes to the law rather than criticise those who avail themselves of the opportunities which the law itself presents," he wrote in an email to the ABC.

Mr Croker said the services accountant provide to their clients in relation to tax advice go far beyond simply minimising their liabilities.

"CA ANZ would naturally take issue with the suggestion that all accountants do is minimise tax. We help our clients prosper in numerous ways," he added.

CA ANZ have also identified a number of questions about Labor's proposal, which so far lacks important details.

Some of the questions include whether the limit will include litigation costs and interest payments to the ATO or costs associated with ATO audits (even where no extra tax liability is found), and whether will there be a carve out for small businesses.

Chartered Accountants also argue that the deduction limit may dissuade some people from seeking private rulings from the ATO or voluntarily disclosing some tax issues via their agent.