As reported in The Guardian and on ABC New Radio this morning, Arnold Bloch Leibler is preparing a test case to argue that the 50-year-old legal precedent which found that childcare costs were “neither relevant nor incidental to producing income” is anachronistic and clearly out of synch with the structure of modern families.
Tax partner Paul Sokolowski, who is working on the case with special counsel Bridgid Cowling and newly appointed senior associate appointee Eileen Liu, told The Guardian that, unlike in previous generations, many Australian families require two incomes to make ends meet and allowing a work-related deduction for childcare would boost productivity across the economy. “You’ve got no distractions - it actually makes your work more productive, makes you more efficient. And that’s precisely what deductibility, the principle, should be based on.”
Speaking on ABC Radio, special counsel Bridgid Cowling explained that when a working parent takes their child to childcare so they can work, it is absolutely an expense incurred in gaining or producing assessable income, or in carrying on a business. “It doesn't matter whether you're employed or whether you're running a business.
“Obviously, where a parent wants to send the child to childcare for socialisation reasons, that is completely different. But those two scenarios can be separated very easily by our taxation professionals and by the excellent people at the ATO.”
Arnold Bloch Leibler will argue that rules allowing essential workers to use childcare during Covid lockdowns proved the services were critical to some employment.
The Guardian explains that the case, which Arnold Bloch Leibler is running pro bono, is currently in its early stages and stems from the work of Melbourne University law school taxation expert Ann O’Connell.
Read the article in The Guardian.
Listen to Bridgid on ABC Radio.
Listen to Paul on ABC Illawarra.
Read senior partner Mark Leibler's pre-election policy pitch for child care tax deductibility.
