July 29, 2015

Horse 1947 - It's Possible To Rort Expenses, Let Us Prove It

As an accountant, I get to see certain people's spending habits pretty closely. With the aid of Google Maps, I could even track someone's typical day if I wanted to.  I know for instance that one client of ours always visits a particular ATM to withdraw cash, once and only once a week. Another client is quite profligate and uses whatever bank card or credit card happens to take their fancy at any given moment.
I also happen to know that even among our relatively small suite of clients, there is a definite blindness in determining what is and isn't a business expense. Phone bills and particularly mobile phone bills might contain great hordes of personal phone calls and I'd have no idea about it. Motor expenses are frequently totted to business bank accounts and yet I'm pretty sure that there's loads of kilometers driven that aren't even remotely connected with business. For one client who lays their taxi fares monthly, if wasn't until we actually saw when those taxi journeys were made that we realised that many of them happened at 11pm and later, often at the weekend and certainly after the imbibing of intoxicating fermented vegetable produce.
The point is that even for a small practice, identifying what is and is not truly a business expense is sometimes difficult and dare I say it, not worth the economic benefit to track down. The net result is that plenty of non-business expenses end up being written against income and in effect, those personal expenses are being subsidised by the taxpayer through lost taxation revenues. If you were to then multiply that across the economy and especially at very large organisations who don't care, then this must surely be a multi-billion dollar rort which is paid for by the taxpayer.

Imagine my horror then, when I saw this tweet from the Bank Of Queensland:


This neologism wasn't even coined by BoQ either. The first time that I came across this in The Economist newspaper (yes, I know that it looks like a magazine but they insist that due to historical reasons, they are a newspaper), my outrage valve blew open (my irony value had already broken):

HOW'S this for a terrible neologism: “bleisure”. It is a portmanteau of business and leisure, and is used to describe what some people claim is a new type of business traveller: one who fits in leisure travel while on the road.
In fact, there has long been a segment of the business travel population that has the means and professional flexibility to add leisure days onto business trips. Travel-related businesses, including Bridgestreet, are no doubt eager to attract these customers, who will spend more money per trip than those who like to keep their travel strictly professional. And terrible marketing neologisms such as “bleisure” can help companies think more carefully about how to attract certain subsets of customers.
- The Economist, 19th May 2015

Yes, 'bleisure' is an ugly ugly word. The Scrabble player in me notices that it is an anagram of 'sure bile'; which is precisely what it makes me want to spit.

Let me unpack this for you. The Bank Of Queensland is encouraging people to combine business and leisure in an effort to attract the sorts of clients (banks don't have customers - banks provide services; not products) who would like to do such a thing. It is obviously in the bank's best interest to do this because business clients are worth more to the bank in higher fees and more services they can sell, than ordinary depositors. A bank as a business, wants to sell banking services to those clients who are most profitable; there's nothing necessarily wrong with that, and in fact as this falls in line with the profit motive, it is very much in line with the raison d'ĂȘtre of the bank. Actions have consequences though.

The Bank of Queensland as a business, has precisely zero concern about how its fees are paid; nor does it care about how its services are used and nor does it need to. Their concern extends only as far as the immediate banking relationship between them and their clients. The word 'bleisure' though, by its very existence, is at least a tacit acknowledgement that expenses which are leisure and therefore not genuine business expenses, can, will and are being claimed against profits. Who subsidises those expenses? The taxpayer, that's who.
It's worth remembering when you get on an aeroplane and turn right to be squished in along with all the other sardines in Scum Class, that the vast majority of people who turn left to go to Business Class are claiming that on company expenses. It's also worth remembering that 30% of those expenses are in effect being subsidised by the taxpayer through lost taxation revenues. The same is also true for something like the Qantas Lounge and that's definitely worth remembering when you are trying to lie down to get some kip, on a carpeted floor because your flight has been delayed, whilst those same business people who turn left on the plane also get comfy lounges and in some cases, actual beds. You are also in effect paying for 30% of their ham and cheese croissant and glass of Crown Royal.

The word 'bleisure' infuriates me deeply because we all know that all of the leisure component of that trip will be claimed as business expense. Companies might enter into some sort of funding arrangement with their employees but its highly unlikely. The Tax Office is never going to undertake any auditing of those expenses except in cases where it intends to make a high profile example of someone because of the hideous legal expense required to do so. Accountants in large firms are never going to check up on what is and isn't truly business expenses because they're probably also riding the gravy train to Rort Town. Accountants in small firms are also not very likely to make these checks either because there simply isn't the economic benefit in doing so. Meanwhile, the taxpayer ends up footing 30% of the expenses for 'bleisure' and I'd like to say that they're being taken for a ride but they ain't going anywhere.
It's possible to love a bank... when you combine business and leisure and let the taxpayer pick up part of the bill. Let us prove it.

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