Contact: Amanda Kennedy
Deloitte
Media Relations
+61 [0] 418 806 477
Contact: Karen Stein
Deloitte
Employment Taxes Partner
0414 625 567
Deloitte Employment Taxes Partner Karen Stein believes the Federal Government can attain its goal of reducing the tax burden for working parents while increasing the accessibility of child care by focusing on Fringe Benefits Tax at the next Budget.
Ms Stein has worked with 37 top 200 corporate participants in a submission to the Federal Government which seeks an extension to the current exemption from FBT for child care benefits.
"Currently the exemption has had little take up by employers, largely due to the fact that it is limited to child care facilities located on the employer’s premises," Ms Stein said.
"A full FBT exemption for child care fringe benefits would allow for the salary packaging of child care costs, with no adverse FBT for the employer, nor any FBT impact on the salary package calculation of the employee.
"This would result in greater accessibility to child care by working parents, as the cost of child care would be paid out of pre-tax salary, and a reduction in the tax burden of the employee, as their taxable income would be reduced by the amount salary packaged.
"Further, by extending the exemption to all forms of registered child care including nannies, both the parents and tax system would benefit."
Ms Stein said it is acknowledged that there is a large unregulated market for nannies, and hence a loss to Government taxation revenue.
"Extending the exemption to include registered nannies would bring them into the tax system, as employees would need to provide substantiation of their salary-packaged expenses to their employer.
"In effect, the employer would enforce the necessary compliance for the ATO, which would be of benefit to the Government."
The Deloitte Submission provides a remedy for the Treasurer's concerns in regard to balancing the interests of increased child care for working parents and keeping the tax burden as low as possible in Australia.
