Is there fringe benefits tax implication(s) on staff's discounted fees?

On 16 December 2021, the Federal Department of Education announced that childcare providers can choose to offer a discounted fee to employees with children enrolled at one of their services without negatively affecting the amount of Child Care Subsidies received. This will commence on 24 January 2022.

This was clearly well-intentioned and welcomed, especially in view of the severe labour shortages for early childhood education and care even before and since the COVID pandemic.

However, the Australian Childcare Alliance (ACA) NSW has received initial tax and legal advice based on prima facie evidence that there could be fringe benefits tax (FBT) implications, for example:

1. only not-for-profit entities who are FBT exempt (eg church-owned ECEC services) will be able to completely realise this announced benefit for their staff;
2. otherwise, there may be a requirement for educators to “contribute” towards an FBT offset to pay for the FBT obligation.

For reference, the Australian Tax Office's list of FBT exemptions and concessions is correct as of 30 June 2021.

ACA NSW is seeking further information from the Federal Government to gain more clarity on the Federal Department of Education's announcement.

Members can contact the ACA NSW team via 1300 556 330 or nsw@childcarealliance.org.au.

PUBLISHED: 21 DECEMBER 2021