Child­care tax bill shocker

Bud­get blow hits ben­e­fit

The Sunday Mail (Queensland) - - NEWS - AN­NIKA SMETHURST

FAM­I­LIES re­ly­ing on gov­ern­ment-funded child­care will have as much as $2244 per child with­held from their bud­gets each year due to a built-in tax de­signed to pre­vent bill shock. Ex­clu­sive anal­y­sis ob­tained by The Sun­day Mail shows that fam­i­lies on the low­est in­comes who re­ceive the means-tested Child Care Ben­e­fit will be the worst hit. The bud­get blow is the re­sult of a Turn­bull Gov­ern­ment de­ci­sion to hold back 10 per cent of the child­care sub­sidy that fam­i­lies are en­ti­tled to, forc­ing fam­i­lies to claim back the dif­fer­ence at tax time. Un­der the cur­rent sys­tem, in­tro­duced by La­bor, the Gov­ern­ment with­holds up to 15 per cent of some pay­ments, in­clud­ing the Child Care Re­bate, to “off­set po­ten­tial debts”. But lower-in­come fam­i­lies on the means-tested Child Care Ben­e­fit have al­ways re­ceived the full amount up­front. From July, all fam­i­lies will re­ceive 10 per cent less, which the Gov­ern­ment claims will pre­vent bill shock at the end of the fi­nan­cial year.

An anal­y­sis of child­care fees, com­mis­sioned by La­bor, shows a sin­gle par­ent with two kids in care for five days a week will miss out on more than $90 each week, or $4488 per year (for 48 weeks of child care).

Two par­ents with a com­bined in­come of $105,000 and three chil­dren in care for three days a week will have $3421 with­held un­til tax time.

La­bor’s child­care spokes­woman, Amanda Rish­worth, said the Gov­ern­ment was treat­ing all fam­i­lies like they al­ready owed a debt to the Com­mon­wealth.

“Child­care costs place a great bur­den on fam­i­lies who are al­ready strug­gling with cov­er­ing the cost of child care,” Ms Rish­worth said.

“With the Gov­ern­ment hold­ing back 10 per cent of their en­ti­tle­ment, it is only go­ing to make it harder on fam­i­lies from week to week.”

Ed­u­ca­tion Min­is­ter Si­mon Birm­ing­ham ac­cused La­bor of “scare­mon­ger­ing”, say­ing the bill shock pol­icy was first in­tro­duced by La­bor.

“La­bor’s with­hold­ing rate was set at 15 per cent, much more than the Turn­bull Gov­ern­ment’s plans,” Se­na­tor Birm­ing­ham said.

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