COVID-19 and the FBT Child Care Exemption: Examining the Restrictive Taxation Ruling Defining ‘Business Premises’

Abstract

Taxation Ruling (TR) 2000/4 titled ‘Fringe benefits tax: meaning of “business premises” focuses on the conditions needed to satisfy the exemption in s 47(2) for the provision of child care on employers’ business premises. By examining the only tax case on the provision and applying statutory interpretation principles, the authors challenge the restrictive interpretation in TR 2000/4 that has imposed a narrow and confusing standard as to which child care arrangements will qualify for the exemption. The authors instead submit that the Australia Taxation Office’s (ATO’s) initial interpretation when the provision was first introduced, that effectively exempted all forms of employer-sponsored child care, is the accurate interpretation. During this Covid-19 adjustment period, when employers are exploring incentives to retain and attract talent back to the workplace and stave off the potential adverse impacts of the ‘Great Reshuffle’, child care offerings by employers will be a valuable incentive. This is therefore the perfect time to shine a light on TR 2000/4 and question its legal accuracy. In the process, other directly related governance issues are illuminated such as the need for an impartial body to issue taxation rulings on exemption provisions.

Keywords: childcare, fringe benefit tax