Clarified: Fringe Benefits Tax Exemption for Childcare

Recalling the announcement from the Federal Department of Education, beginning 24 January 2022, ECEC services can now offer discounts to employees who have a child(ren) enrolled in an ECEC service where they work or is owned by their provider. This announcement was meant to overcome the previous limitations of Child Care Subsidies. 

ACA NSW has clarified the fringe benefits tax impact and highlight the exemption that is available via Clause 47(2) of the Fringe Benefits Tax Assessment Act 1986: 

47  Exempt residual benefits

(2)  Where:

(a)  a residual benefit provided to a current employee in respect of his or her employment consists of:

(i)  the provision, or use, of a recreational facility; or

            (ii)  the care of children of the employee in a child care facility; and

(b)  the recreational facility or child care facility, as the case may be, is located on business premises of:

(i)  the employer; or

(ii)  if the employer is a company, of the employer or of a company that is related to the employer;

the benefit is an exempt benefit.

Services will need to consult with their accountants/bookkeepers to ensure the proper recording of transactions in order to ensure fringe benefits tax exemption for the benefit of both employees and the service.

Should ACA NSW members require any further information/clarification, please contact the ACA NSW team via 1300 556 330 or nsw@childcarealliance.org.au.

PUBLISHED: 23 FEBRUARY 2022​