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NFPs Force Rudd Govt's Hand Over Tax Changes


30 June 2008 at 3:08 pm
Staff Reporter
The Rudd Government has made an 11th hour bid to prevent changes to fringe benefits taxes from disadvantaging charity and community workers.

Staff Reporter | 30 June 2008 at 3:08 pm


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NFPs Force Rudd Govt's Hand Over Tax Changes
30 June 2008 at 3:08 pm

The Rudd Government has made an 11th hour bid to prevent changes to fringe benefits taxes from disadvantaging charity and community workers.

The Government will move urgent amendments in the Senate this week to protect Not for Profit workers from being worse off.

The Government says the amendments will restore the use of the net reportable fringe benefit in income definitions for Family Assistance to ensure staff in Not for Profit organisations will not suffer a loss of family tax or child care benefits after 1 July 2008 if their circumstances have not otherwise changed.

The changes, introduced by the previous government, redefined what constituted income, and would have seen workers from the charity and community sectors who use salary packaging losing around $50 a week in family and child care payments.

The changes were to be introduced from the start of the new financial year on July 1.

The Government acknowledged in June that the changes would affect people delivering vital community services and asked for the sector to ‘bear with us’ while it sorted through the policy issues.

Senior ministers were bombarded with emails from charity and community sector workers who stand to lose up to $50 a week in family and child care payments because of the new tax measure

Frank Quinlan, the chief executive of Catholic Social Services, told ABC radio that the new treatment of fringe benefits tax could have a very nasty effect.

Quinlan said for workers earning about the $40,000 a year mark they might well be $40 a week worse off which is a very substantial impact on people who are often doing some of the hardest work in the charities and communities sector.

The sector uses salary packaging to make up for poor pay rates. So a charity worker who’s paid $36,000, including salary packaging of $16,000, will be treated as though they earn $50,000. That means less in family and child care payments.

Linda White from the Australian Services Union says the net effect has got to be that people will vote with their feet and march out of these services not for reasons that they don’t want to work there but economically they cannot afford to feed their families any more.

More than 500,000 people work in the community welfare sector. The union says all those with children, as many as 200,000 will be affected.

The Families and Community Services Minister Jenny Macklin says the Government was only recently made aware of the problem.

Macklin says these are complex issues, with flow on effects to employees beyond the Not for Profit sector receiving family assistance. Therefore the Government has asked the Henry Commission to examine the complexity of existing fringe benefit arrangements and make recommendations to improve equity and simplicity in the longer term.



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