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Australian Taxation Office rules against employers claiming fringe benefits tax exemption for providing child care places outside their premises

MONICA ATTARD: The Australian Taxation Office has ruled against some businesses which have been getting fringe benefits tax exemptions on childcare. The Tax Office had been allowing a number of employers to enter into leasing arrangements with childcare centres which allowed them to be exempt from the tax.

But, fearing an increase in loss of revenue, the Tax Office appears to have re-interpreted the current policy. According to Susan Biggs, a director of Families at Work which is a consultancy which helps business develop childcare strategies - about four to five thousand families from all socio-economic levels could lose their places. But Rebecca Gorman put to her that the fears of the Taxation Department were actually legitimate.

SUSAN BIGGS: There is a legitimate concern there, although those people who are involved in the area say that what will happen is that employers will no longer provide childcare for their employees if they can't get childcare that's exempt from fringe benefit tax. So what it will mean is that employers will stop providing childcare places so the private childcare operators that are now building their centres specifically for employers will stop building those centres. So, in other words, we'll have less. The consequences of it will be there may be less childcare places in general for the public.

A lot of things need to be thought about, I think, before we make any final decisions about how we should be paying for childcare in Australia, and I think also we need to think about supply, because the issue is not just about paying for childcare and about the fees but also about the number of childcare places we want. And if we want more and more childcare places, we've got to provide some incentive to build those places, an incentive to employers as well as an incentive to private operators.

Now, I would have thought that the new Liberal Government's priority being small business, they would be able to look at this issue from the advantage of small businesses, whether it be childcare centre operators who are saying that they want this thing to exist because it will encourage them to build more childcare places, and also from the point of view of employers who are in small business because what this interpretation is saying is that if you are a large business and you can afford to build childcare on your own business premises, then you can get fringe benefit tax exemption. But if you are a small business or a medium-sized business and you can't afford to build your own centre, well too bad. You can't go out and lease space somewhere else because you won't get those FBT exemptions. So there's inequity there that I think we need to think about.

REBECCA GORMAN: But isn't it also an issue that is at the very heart of the whole childcare debate, that whose responsibility is it to provide childcare places and the reason why childcare hasn't been tax deductible before?

SUSAN BIGGS: Absolutely. And, according to the Liberal Government, the responsibility is with private enterprise. What they have said in their policies and certainly in the childcare policy that recently came out before the election was that they would be encouraging private operators to provide childcare places. And that's where their energy and efforts have gone. Now, I see this as directly opposing that.

REBECCA GORMAN: Hasn't there always been, however, a philosophy amongst the childcare industry and women's groups that it is the responsibility of employers and governments to provide subsidised childcare places and that once you have childcare as a tax deduction that takes the responsibility off governments and others to provide places? So doesn't this come back to that, putting it back on councils and governments to actually live up to that responsibility of providing places?

SUSAN BIGGS: I think it's very important that the Government doesn't stop providing places and continues to provide places and plan for places and provide operational assistance to community-based childcare services, and also they continue to provide childcare assistance and childcare rebate to parents. But I think that that can co-exist with providing fringe benefit tax exemptions to employers to also encourage them to build places.

We desperately need places for children under three. I think we should be doing what we can to make sure that those places are built and available.

MONICA ATTARD: Susan Biggs from Families at Work, and she was speaking there to Rebecca Gorman.