Save
money on childcare fees
This is the third article in our series on
salary packaging.
This week it features the benefits of salary packaging your
employer provided childcare fees.
By
Maria Cavallo
One of the most convenient benefits for ADO members to package
are the fees regularly paid for childcare expenses.
Childcare fees, where Defence or Commonwealth childcare centres
provide the care, can be included in your salary package as the
fees are exempt from Fringe Benefits Tax (FBT).
A list of eligible childcare centres is available from the Salary
Packaging handbook that has been created with SmartSalary, the
ADO’s salary Packaging administrator.
The Salary Packaging Handbook is located on the Smartsalary website
www.smartsalary.com.au.
Once on the web site, you can access the area for ADO members
by clicking the yellow login button and typing the employer code:
ADO.
Please note that there is no benefit for ADO members to salary
package childcare fees where Defence or Commonwealth childcare
centres do not provide the care, as these childcare fees are subject
to the full rate of FBT (48.5 per cent).
So why salary package employer provided childcare fees?
By including employer provided childcare fees in your salary package
you may be able to significantly increase your effective take-home
pay (eg. an employee who spends $200 per week on childcare, earns
$65,000 per annum and does not receive government assistance due
to family income tests will save around $4,000 per annum).
This is because your childcare fees are paid from pre-tax dollars,
rather than posttax dollars.
Childcare fees that are paid directly to the childcare centre
from your salary package every fortnight are not subject to tax,
therefore you save the tax that you would have otherwise paid
had you received your salary, paid income tax and then paid your
childcare fees.
It is important to note that salary packaging childcare is not
financially effective for all people.
ADO members with family income below certain thresholds may receive
the Commonwealth Government’s childcare benefit. When salary packaging,
this benefit would cease to be paid.
To assess which option will provide the greater benefit, the ADO
recommends that you consult with your accountant or financial
advisor.
A list of ADO approved financial advisers can also be found in
the salary packaging handbook located on the SmartSalary website.
