Question:
Our View - providing a tax deduction for childcare, even if it is provided by a nanny, is a great idea
Answer:
Recent changes are outlined below:
July 1, 2022
- Loss carry back for eligible companies extended to cover 2023 income year.
- Professional firm profits diverted to the professional's spouse or other associates to be reviewed under new Tax Office guidance.
- Corporate collective investment vehicle legislative regime introduced.
- Temporary full expensing of depreciating assets extended to include 2023 income year.
- Depreciable assets of a company joining a tax consolidation group have tax costs setting rules modified for assets depreciated under temporary full expensing rules.
December 9, 2021
- Reduced Pandemic leave disaster payment of $750 per week made available through to 30 June 2022.
August 5, 2021
- COVID-19 Disaster Payments are non-assessable non-exempt income in 2021 income year and later. Payments phasing out as vaccination rates increase.
July 1, 2021
- New Investment Engagement Service launched for businesses planning significant new investments in Australia.
- Tax Office small business independent review service made permanent for businesses with turnover < $10m, for income tax, GST, exercise, luxury car tax, wine equalisation tax and fuel tax credits. Requested before amended assessment issued.
- Small business income tax offset for individuals increased to provide a reduction of 16% for a tax payable up to $1,000.
- Self-managed superannuation funds can now have six members, increased from four members previously.
July 1, 2021
- Some COVID -19 state and territory business grants received by small and medium enterprises are non-assessable, non-exempt income for 2021 and 2022 income years.
- Certain state, territory and local government financial support for individuals and businesses suffering COVID-19 impacts made exempt where businesses have turnover less than $50 million and only in eligible programs.
March 31, 2021
- JobKeeper payments scheme ended.
October 5, 2020
- Boosting apprenticeship commencements subsidy (up to 50% of apprentice's wages) is assessable income.
June 4, 2020
- Homebuilder grant for new home or substantial renovation construction is not subject to income tax.
April 1, 2020
- COVID-19 cash flow boost payments are not subject to income tax
Chief Executive Women, an organisation of 200 female corporate highflyers including Ita Buttrose and Heather Ridout, called for the government Tax Forum … to review the opportunity and cost of tax deductibility of child care for Australia.
In support of their call for childcare deductibility, Chief Executive Women say that the cost of women not participating fully in the workforce is $93 billion per year and that a lack of affordable, reliable child care is one of the biggest obstacles. They say that child care in Australia is expensive compared to Singapore, Hong Kong and the US.
That high cost is keeping talented, highly productive women from returning to work. Women represent 55% of all university graduates but only 8% of senior executives and 12.5% of directors of listed companies and apparently, Australia ranks 44th in the world for women’s participation in the workforce.
The childcare rebate is capped at $7,500 per annum whereas the cost of childcare could reach as much as $50,000 for a working mother with a number of young children particularly if the family was located in Sydney.
Neither the Government nor the Opposition support extending the childcare rebate to nannies. They say it would be too expensive and accessed only by high income families. But, in some circumstances a childcare centre is not feasible (for example, when there are a number of very young children involved) and it could be potentially much more flexible and convenient for an executive mum to have access to a nanny.
Chief Executive Women acknowledge the introduction of paid parental leave. Unfortunately, that system places yet another administrative burden on business. Deductibility for child care provides an incentive for mum’s to return to work without imposing further regulation on business.
Andrew and Tony Lovett
