Childcare

JoannaK

JoannaK

This isn't strictly property related.

It's come to the point where I can't bring my son to work with me any more as I'm not getting any work done any more. I've had to place him in childcare 3 days a week.

My line of thinking is that I should be able to claim it honestly as it is impossible for me to work without it, therefore is a necessary expense in running my business, but I've heard somewhere that I can't claim it as a business expense.

How can I legitimately claim the costs of the care as a geniune business expense? I don't like the thought of running the costs through my books as something it's not then having to justify and prove it during an ATO audit.

Any thoughts anyone?
 
I've never done this or heard of anyone doing it in relation to child care, but it works in giving donations to non tax-deductible charities, such as churches.

You could ask the child care centre if they were willing to accept a "sponsorship" from your business in lieu of child care payments. So, you do something to advertise your business in the child care centre and then pay the equivalent to your child care fees for the privilege of advertising. It is then an advertising expense for your business.

You would not then be able to claim CCB rebates from the govt though.

Pen
 
Joanak,

The 2005 budget should interest you. Firstly, you have to earn more than $58,000 in 2005 to pay more than 31.5% tax and Medicare. In 2006 it is $63,000 and in 2007 it is $70,000. So with a child to look after I am assuming you will still be in the 31.5% tax bracket. The government has introduced a childcare rebate of 30% on any out of pockets after the child care assisstance. So this is as good as a tax deduction anyway and better if you earn under $21,600. It does apply to childcare expenses you paid in the 2004/05 year but you can't claim them until you do your 2006 return. That's right you have to wait up to 2 years to get your money and worst still keep your receipts for that long.

Julia Hartman
www.bantacs.com.au
[email protected]
 
Thanks everyone for your responses. I wasn't actually looking to claim any rebates or get any govt. assistance...As I don't pay myself a wage or salary I just want to run the costs through my business, and be able to claim it as a business expense.
 
Hi Joanna
I had a thoughty (no it didn't hurt :) ) - would it be feasible to employ a nanny and have the company pay their wages?

Not sure if it's sustainable but it may be possible...

my 2c worth

ecogirl
 
Ecogirl said:
Hi Joanna
I had a thoughty (no it didn't hurt :) ) - would it be feasible to employ a nanny and have the company pay their wages?

Not sure if it's sustainable but it may be possible...

my 2c worth

ecogirl
Click to expand...

It wouldn't work. The wages need to be in respect of income producing activities and it wouldn't meet the necessary nexus.

The best you could hope for is to make it an exempt fringe benefit in line with TR 2000/4 and even that would really be pushing it for small businesses.
 
JoannaK said:
As I don't pay myself a wage or salary I just want to run the costs through my business, and be able to claim it as a business expense.
Click to expand...

JoannaK, I can sympathise with you. My wife and I run a business and we have three kids. 6, 2 and 12 months. It's simply not viable to send both under 6's to creche 5 days a week (and also not good for them, but that's my opinion). The fees already cost us a mortgage. That, by the way, is in REAL terms (after CCB and any Family Assistance we qualify for, which isn't worth it...). Many of our friends mums have simply opted out of work, it costs them more to have a job than not too. Like all kids, they get sick etc etc, and they end up at the office - and you know what that's like. Forget work.

I'm not going to mention parties, but a certain side of government has made it quite clear (via policy) that they want YOU at home. You're female and you have a kid, bad luck. You're a bad mother for even thinking about work, and you should be stuck at home all day while hubby works. If you don't have a hubby, then "oh, you're one of 'those' mothers!". I understand there will be some dissagreement here, and both sides of government need a good kick, but this government has made the distinction time and again. It's NOT obvious, it's quite sneaky.

Lastly, and although it doesn't 'sit' very well with me either, you should be aware that it is very dangerous to contemplate claiming childcare costs via your business. There is NO legislation to allow this. It is illegal. Further, you cannot run some type of in-house 'creche' either. Any arrangement must be registered and approved by the Family Assistance Office (FAO) and the ATO. Part of the process ensures that the 'creche' is separate, and there are qualified, registered carers, with First Aid training etc etc. Only the BIG companies (such as Westpac et al.) can afford this, and ONLY THEN can you 'package' such childcare costs via salary sacrifice.

Obviously, you could 'think up' something that'd sound reasonable to your accountant and the ATO in regards to 'funneling' the costs via your business. If you go this way then be very, very scared if you're audited by the ATO (which for small business is a matter of 'when', not 'if'). You take a chance...

Sorry I can't be the bearer of better news, because I know exactly how you feel. I'm male, but get the kids often enough at work to really feel the frustration.

Cheers,
 
Slightly off track to this, but does anyone Salary Package their childcare fees either through an employer's childcare centre or a seperate commercial centre?

My understanding is that if your employer is free-thinking enough, you can salary package most things and although it's not a claimable business expense, you are using pre-tax dollars to pay for it so there is some benefit.

:cool:
 
In my limited understanding it is only things which are FBT exempt which are worth
salary packaging, otherwise you just end up paying the tax out of pocket even though
you never received the cash, but the services instead.

Then again, if you work for a hospital or other public benevolent institution you might
find that everything is FBT exempt (I've heard.)

Corrections welcome as this is all second hand information.

andy
 
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