Child care should be FBT-exempt, says Business Chamber
The Federal Budget should make child care FBT-exempt and redesign the current Part A and Part B Family Payments as a way of lifting workforce participation, according to NSW’s largest employer group, NSW Business Chamber.
The Chamber made the call in its Pre-Budget Submission to the Federal Government which stated that lifting workforce participation had to be a critical outcome delivered by the 2008 and subsequent Budgets.
“Child care and access to child care is as much an economic issue as a social issue. Business should be able to make access to child care part of its offering to potential employees without having to incur fringe benefits tax. Currently, only a small number of companies can offer such benefits to employees – and the fact is they don’t,” said Sharon Cadwallader, Northern Rivers Regional Manager of NSW Business Chamber.
“The current arrangements that only allow FBT relief to businesses where child care facilities are provided on their own premises are in fact a sham.
“ATO data released last week says the cost of this tax concession is less than $1 million per year. In other words, the take-up of places is possibly in the order of 100 to 200 child care places nationwide.
“The reason businesses don’t take up this existing concession is that businesses do not want to own, operate and bear the risk of running child care centres. Businesses don’t see running their own child care centres as part of their core business. The present concession is a sham and it makes more sense to offer a meaningful concession which would be a total FBT exemption.
“There is also a case for re-examining how Part A and Part B family payments are applied. Whilst Finance Minister Lindsay Tanner has argued for means testing of Part B family payments, we believe the Government has to examine the payments to determine what model will best encourage greater workforce participation.
“The real weakness of Part B Family Payment as it stands is that it focuses on the second income earner rather than the total household income.”
Ms Cadwallader said she supported the Government’s commitment to increase the Budget Surplus to 1.5 per cent of GDP as a way of containing inflation.
“Increasing the Budget surplus will allow the Government to deliver on the planned PAYE tax cuts without creating additional inflationary pressures,” she said.
A full copy of the NSW Business Chamber Pre-Budget submission is available at www.nswbusinesschamber.com.au
NSW Business Chamber has over 30,000 members and is affiliated with 110 chambers of commerce.
