Baby tax change could bring bonus on return
The Tax Institute of Australia says there are a range of benefits that would come from making child care tax deductible.
Authorities from the Institute say it is an “anomaly” that day-care and similar services are not eligible for tax concessions, given the broad economic benefits of having mothers return to work more easily.
In an interview this morning, the Tax Institute's Robert Jeremenko said for women who want to get back to their jobs after childbirth, there should be as few hurdles as possible.
“If we can encourage more parents - in the majority of cases women - back to work after having a child, should they so wish, by removing disincentives in terms of the costs of child care, then that's good for the whole country,” he said.
The scheme would be costly, but Mr Jeremenko says money spent would be returned through extra productivity.
“There are expenses attached to everything and we obviously have a burgeoning budget, but for the right decisions, expenses are acceptable.
“The Federal Government is very much committed to family assistance and, as you know, the paid parental leave scheme is another very expensive policy,” he said.
The Productivity Commission is seeking out such changes to boost performance across the Australian workforce. It is reviewing the childcare system as part of its wide-ranging assessments, but has made no indication whether tax breaks are part of the plan.
There is also already a childcare rebate of up to $7,500 available, which is not means-tested, but the Tax Institute says deductible childcare would be excellent in addition.
In announcing the Productivity Commission in November, Prime Minister Tony Abbott said child care needed to be adjusted to meet the demands of non-traditional working and living arrangements.
“We think it is important, given that there hasn't been a serious look at the childcare system for two decades, that we have this serious look, see how we can improve it, see what we can do with our child care system to enhance participation, to boost productivity,” Mr Abbott said.
The Commission’s review of childcare and dozens of other sectors is expected by the end of October