In my business I can claim as a tax deduction a vast range of expenses, except for the most important one: child care. Why shouldn’t this expense be tax deductible? If I’m not returning to work to earn an income, I don’t need to procure childcare at significant expense: full-time child care for my son is $22,000 a year. 

The 50 per cent rebate for out-of-pocket child-care expenses is inadequate at $7500 and makes no allowance for regional differences. In Sydney it costs me $90 a day so my rebate caps out after 32 weeks. In Adelaide it costs $60 a day so the rebate covers a full year’s costs. Why is there no attempt to even out this disparity?

This is the question I posed to Kate Ellis, Minister for Early Childhood Education, Childcare and Youth last week in the  Business Review Weekly.   As you might expect, the Minister responded for the most part by dodging the point of my question altogether!  Some things never change.

Of course she pointed out the the Rudd government increased the Child Care Rebate from 30 per cent to 50 per cent of all out-of-pocket expenses and the maximum is now $7778 per child per year, compared with $4354 under the Howard government.  However she failed to mention that with this increase came limits on other government benefits for higher income earners, which previously were not means tested by the Howard government.

The Minister argues that most taxpayers are better off with government rebates than tax deductibility.  As an accountant and a working mum, I disagree with this – the ability to offset income against childcare expenses without the rebate limits would benefit anyone who is earning more than they are paying in child care.  And lets face it, would you return to work it was costing you more than you would earn?

What’s your take – would you prefer rebates or tax deductibility?