Childcare may draw FBT exemption

COMPANIES setting up childcare facilities, particularly shared ones, may be entitled to fringe benefits tax exemptions.

Deloitte Touche Tohmatsu FBT specialist David Shawcross said where two or three businesses combined to set up a child care centre for their employees they would receive FBT exemption.

“A draft Australian Tax Office ruling helps businesses that don’t have space for childcare on their premises,” Mr Shawcross said.

“It was traditionally held by the ATO that a business premises was where a business operated.

“If a childcare centre was not on the business premises then it was subject to FBT.”

The draft ruling came from a case involving Esso which successfully argued the childcare facilities it provided to employees on premises leased in conjunction with other employers were exempt from FBT.

Mr Shawcross said to take advantage of the benefits, the businesses had to be jointly involved in running the childcare centre from the lease up and the centre had to be for the benefit of those businesses’ employees.

Because it is a draft ruling, it does not provide an absolute test of the law until public comment and a final ruling by the ATO.

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