Child care and tax deductibility

We recently lodged our submission to the Productivity Commission’s inquiry into future options for child care and early childhood learning.

Our submission is particularly focussed on the following part of the inquiry’s terms of reference:

Options for enhancing the choices available to Australian families as to how they receive child care support, so that this can occur in the manner most suitable to their individual family circumstances. Mechanisms to be considered include subsidies, rebates and tax deductions, to improve the accessibility, flexibility and affordability of child care for families facing diverse individual circumstances.

There are many women who would participate in the workforce except for the unavailability of child care. In many cases these individuals would earn higher wages than the wages of the child care workers. Therefore, a tax concession to subsidise the cost of child care should provide a positive benefit to the Australian economy by generating tax revenue in the form of income tax on wages.

Two options for improving access to child care through the tax system would be to allow a tax deduction for child care costs and to use a refundable tax credit or cash grant. Access our full submission.

Robert Jeremenko

Robert Jeremenko CTA is Senior Tax Counsel of The Tax Institute.

The Tax Institute is Australia’s leading professional association in tax. Its 13,000 members include tax agents, accountants and lawyers as well as tax practitioners in corporations, government and academia.


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