Member Login

You are not logged in.

- Members Area Login
- First Time Access
- Password Lookup

The National Tax and Accountants’ Association (“NTAA”) has today supported reforms to the tax treatment of child care costs that have been attributed to Senator Bronwyn Bishop.  That is, the NTAA believes that employers should not be subject to FBT (which is levied at 46.5%) on child care benefits provided to an employee.

However, the NTAA believes child care tax reforms should go further.  In particular, the NTAA believes the current child care tax offset should be scrapped and parents should be entitled to claim a full tax deduction for these costs.

Under the current rules, parents are entitled to a maximum tax offset of up to $4,000 per child when lodging their 2006 tax return and this is calculated at 30% of net child care costs.  Unfortunately, spiralling child care costs have meant that many parents are still out-of-pocket by thousands of dollars even after taking into account the tax offset.  

Andrew Gardiner, Spokesman for the NTAA today stated “In practical terms, the current rules provide an inequity between employees of large corporate employers (who can offer in-house child care that is FBT exempt) and those who are employed by small companies.  As a minimum, we believe that a “blanket” FBT exemption should apply for employers who provide child care benefits to an employee.”

Andrew Gardiner also stated “The easiest way to reform the tax treatment of child care costs would be to make them fully tax deductible.  Such an initiative creates a win-win situation.  This is because parents will be financially advantaged should they wish to return to the workforce and employers will be more willing to offer child care benefits.”