COVID-19 and Childcare Expense Deductions: Revisiting the Decision in Lodge

Australian Tax Review, Vol. 50, 2021, pp. 51-80

35 Pages Posted: 8 Mar 2022

See all articles by Lydia Thiagarajah

Lydia Thiagarajah

Independent

Amanda Darshini Selvarajah

Monash University, Department of Business Law & Taxation

Date Written: 2021

Abstract

The critical importance of childcare services was emphasised during COVID-19 where it was recognised as an essential service. The events of COVID-19 have fostered a newfound appreciation for the central role of childcare, without which many parents cannot gain or produce income. It is therefore timely to revisit the decision in Lodge v Federal Commissioner of Taxation (Cth) (1972) 128 CLR 171 (“Lodge”) that formed the precedent for denying tax deductions for childcare expenses. The article finds the single High Court judgment on this important issue inadequate, and reliance incorrectly placed on a British case. The article demonstrates how a statutory and contextual interpretation would support a different outcome. The article also calls upon Parliament to act should the courts not do so and addresses past criticisms on such calls by proposing clear deductibility parameters.

Keywords: childcare, deduction, income tax

Suggested Citation

Thiagarajah, Lydia and Selvarajah, Amanda Darshini, COVID-19 and Childcare Expense Deductions: Revisiting the Decision in Lodge (2021). Australian Tax Review, Vol. 50, 2021, pp. 51-80, Available at SSRN: https://ssrn.com/abstract=4051330 or http://dx.doi.org/10.2139/ssrn.4051330

Lydia Thiagarajah

Independent ( email )

Amanda Darshini Selvarajah (Contact Author)

Monash University, Department of Business Law & Taxation ( email )

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