Salary Packaging Child Care fees

As has been touched on above, to be eligible for Fringe Benefit Tax concessions the child care needs to be provided on the business premises of the employer, which eliminates this option for many people.

If it does remain an option, it’s also correct that you will then lose eligibility for the Child Care Rebate, so the tax saving of packaging needs to be weighed against the lost rebate.

Whether it works out for you (if available) will often depend on whether you’re in the higher marginal tax rates and also how many days per week you use the child care (because this will determine how fast any Child Care Rebate caps out at the maximum).

shirty_bear said :

My understanding – and I’ll be happy to be corrected – is that you’ll pay as much FBT as you save in income tax. Net result is that you lower your taxable income, while earning the same money and paying the same tax.
The only benefits I can think of would be for meeting Centrelink income thresholds (unless they’ve got smarter in the last couple years) or cutting salary-based payments like child support/alimony.

I’m not even sure that works. FBT amounts get entered on your PAYE statement and for example if you are paying a Uni debt you pay at the rate your grossed up salary is calculated at. Same applies if you say get a car park space and that goes on your PAYE statement. Its to stop people from lowering their salaries to avoid making payments for various things. Again, not sure how widespread this affect people, but definately uni debts and I’m thinking child support also..

My understanding – and I’ll be happy to be corrected – is that you’ll pay as much FBT as you save in income tax. Net result is that you lower your taxable income, while earning the same money and paying the same tax.
The only benefits I can think of would be for meeting Centrelink income thresholds (unless they’ve got smarter in the last couple years) or cutting salary-based payments like child support/alimony.

We did it for the first child. Was worth it for the wife’s EL2 job. From memory the childcare centre needs to be on Governement property or something like that. Our child was at the one in the industry building on Binara st.

You can salary package anything. Whether it’s worth it is another matter. My understanding with childcare is that you will possibly lose the childcare tax rebate if you salary package. Might be incorrect about that though. I also thought that with childcare the premises had to be on your worksite….as in, if you worked at Parly house you could put your child at the one there.