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Childcare Tax Breaks

Child care tax breaks 'benefit everyone'

By Elizabeth Colman
From: The Australian

BIG business has called on Peter Costello to give parents who use nannies and family daycare the same tax breaks as those who use childcare at their workplace.

Changes to tax rules to make nannies exempt from fringe benefits tax would boost workforce participation, says a pre-budget submission to Treasury by a group of 37 top-200 companies. Family daycare, before- and after-school care and childcare centres should also be made FBT-free, says the submission, written by global accounting firm Deloitte.

Broadening the FBT rules would result in "a win-win situation for Government, employees and employers," said Deloitte tax partner Karen Stein, who said the change would also mean a revenue gain.

"Childcare fringe benefits currently make up a negligible part of FBT revenue," Ms Stein said.

"Thus, extending the childcare exemption as proposed will have little or no impact on the total FBT revenue collected by the ATO.

"The new measures we have recommended look to improve the limited childcare exemption from Fringe Benefits Tax by broadening the 19-year-old exemption to additional forms of childcare. This will bring the legislation into the 21st century, better reflecting the needs of working parents and assisting employers with retaining quality employees."

She said the changes would also help to reduce childcare costs and better regulate the nanny industry.

"Where such employees salary-package their childcare costs, they will be precluded from accessing the Child Care Benefit, creating additional savings for the Government," she said.

Employers would require documentation to substantiate such payments, "which will create a layer of compliance for the unregistered carers, bringing them into the tax net".

Labor yesterday backed the proposal, saying employers lost good workers when childcare was not affordable.

"I think it's well worth examining the tax treatment of childcare centres that aren't on the premises of the employer," said Opposition work and family spokeswoman Tanya Plibersek.

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