Childcare tax bill shocker
Budget blow hits benefit
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.