Contact: Vessa Playfair
Deloitte
Director of Communications
0419 267 676

Contact: Karen Stein
Deloitte
Deloitte Tax Services
0414 625 567

In a submission to the Department of Treasury by a group of 37 Top 200 companies, its author professional services firm Deloitte, called on the Federal Government to increase workforce participation by addressing the current child care exemptions, currently restricted to employers business premises only.

"The new measures we have recommended look to improve the limited child care exemption from Fringe Benefits Tax (FBT) by broadening the 19 year old exemption to additional forms of child care, including registered nannies, family day care, after and pre-school care, as well at child care centres located off the employer’s business premises," says Deloitte Tax Partner Karen Stein.

"This will bring the legislation into the 21st century, better reflecting the needs of working parents and assisting employers with retaining quality employees. Further, the recommendations will assist the Government with executing its policy of work force participation, and reducing child care costs," says Stein.

"Of note," says Ms Stein "is the positive revenue impacts which will result. An improved exemption will lead to more employees remaining, or re-entering the workforce, resulting in additional income taxation revenue for Government. At the same time, where such employees salary package their child care costs, they will be precluded from accessing the Child Care Benefit, creating additional savings for the Government."

"Further," says Ms Stein, "by allowing salary packaging of child care benefits, the proposal will assist Government with regulating the $6b nanny industry. Employers will require documentation to substantiate such payments, which will create a layer of compliance for the unregistered carers, bringing them into the tax net."

"It is well understood," says Stein "that over half of the current FBT revenue of $3.5b stems from car fringe benefits. Entertainment fringe benefits follow. Child care fringe benefits currently make up a negligible part of FBT revenue. Thus, extending the child care exemption as proposed will have little or no impact on the total FBT revenue collected by the ATO."

"It really is a win-win situation for Government, employees and employers."