Government must ‘think outside box’ on childcare tax relief

Mark Hilliard The tax specialist company Taxback. com has urged the Government to reconsider some kind of relief on childcare following comments by Finance Minister Michael Noonan that such a move would be unfair to stay-at-home parents.

Asked recently in the Dáil to address the subject, Mr Noonan said he had no plans to introduce any measure as to provide tax relief could amount to “one-earner couples” effectively subsidising those families where both parents work.

“This could be seen to unfairly discriminate against those individuals who stay at home and look after their children,” he said.

“In addition, tax relief is only of benefit to those in the tax net and it is estimated that in 2014, 39 per cent of income earners will be exempt from income tax.

“It could also be argued that any tax relief would most likely be absorbed by childcare providers in the form of higher prices.”

However, Taxback.com has said the Government must demonstrate a logical approach in order to ensure “crippling” costs of childcare do not prevent parents returning to the workforce.

"We, or at least the Government, need to start thinking outside the box," said senior consultant Christine Keily.

“For the recovery of the economy we all know that the more jobs there are the stronger we will be and if more children attend approved childcare facilities more childcare jobs will be created.

“If we were to consider an extension of the current one year free preschool for all as a starting point, we might be looking in the right direction as it keeps everyone on an equal footing.”

If an additional free preschool year isn’t an option then the Government ought to consider tax relief up to a certain level, added Ms Keily.

This would allow some parents avail of childcare for even part of the week for respite or to allow them attend courses.

“In addition, if the relief was, for example, limited to approved facilities that could help in respect of child protection issues.”

Taxback.com is a Dublin-based multinational providing specialist tax return services to private and corporate clients across 100 countries.