Charity welfare sector gets relief from new tax moves

The Federal Government has rectified the “injustice” of tax changes that would strip low-paid charity workers of up to $50 a week from 1 July that resulted from a 2006 crackdown on parents trying to avoid paying child support.

The Government’s amendments to The Families, Housing, Community Services and Indigenous Affairs and Other Legislation Amendment (2008 Budget and Other Measures) Bill 2008, passed  through Parliament on 27 June, have restored the use of the net reportable fringe benefit in income definitions for Family Assistance.

The Federal Treasurer Wayne Swan and the Families Minister Jenny Macklin had promised to organise a remedy before the new financial year but said it was complicated.

The problem was created by the Howard government, supported by the ALP, when it moved to stamp out the use of salary sacrifice to avoid child support. 

The community sector relies strongly on salary sacrifices and fringe benefit tax breaks to boost the low wages of its staff. This provides up to $30,000 a year that does not count towards the means test for family and child-care payments.

Mr Swan said “now that we have been made aware of just how badly people will feel the impact of this we intend to right the wrong”.