Lengthy book-keeping, fear of loss of earnings and an inadequate tax-exemption threshold have contributed to the poor take-up of a recently introduced tax measure for childminders.
In its current form, the measure exempts a childminder from paying tax on earnings of less than €10,000. However, on earnings over €10,000 the childminder's entire childminding income is subject to tax. With the average childminder earning about €200 per child per week, €10,000 is perceived by many childminders as an unrealistic earning threshold. Having to keep accounts, receipts and fill in extensive documents all contribute to the perception that registering for tax is an added avoidable chore.
One childminder in Lucan, Co Dublin who earns €230 a week for looking after one child on a full-time basis and another on a part-time basis, says childminders are reluctant to have their small earnings taxed when they already incur so many overheads and expenses.
"People forget that we have to pay insurance, buy toys and pay gas bills. They also don't tend to remember that we put an awful lot of the money we earn back into the business," she says.
This childminder, like many others, aspires to expand her business at home. However, regulations stating that a helper must be employed when the number of children exceeds four is yet another factor making childminders reluctant to register for tax.
Tracey Nelson, childminding advisory officer with Dún Laoghaire-Rathdown county childcare, says childminders are concerned about the impact the tax exemption could have on their husbands' earnings and the marriage tax.
Because the exemption is means tested, it can affect welfare payments, rent allowance and the availability of the medical card, according to Nelson.
"A lot of childminders just don't know about the exemption. For so long they were completely untargeted until these new programmes, but they are very keen to put in the training, to become professional and to have people like me coming out on advisory visits," she says.
One childminder on the southside of Dublin, who cares for her two grandchildren, is a registered childminder with Childminding Ireland. She says that if she were to declare the €250 she receives for minding two children each week, she would immediately exceed the tax exemption. She says, however, that while she is content to pay insurance and register as a childminder, many others are choosing to avoid both measures as they are perceived as costly steps.
Another childminder who has been looking after children in her home for five years registered for tax two years ago. While the amount of tax she pays is minimal, her PRSI contributions are 7.25 per cent. "If I was working full time I would be paying just an extra 0.5 per cent and yet enjoying all the benefits. As it stands I'm working part time, paying 0.5 per cent less and getting no benefits," she says.
Fellow childminders, however, are less forthcoming about registering for tax or registering as a childminder due to fears that this would give rise to inspections from the health boards which could subsequently lead to increased maintenance and childcare costs.
"A lot of childminders only do childminding for three or four years when their own kids are small, so it's a very short window for them and they tend to opt out of training and tax . . . At the moment you get nothing back if you pay tax. There are absolutely no benefits," she says.
Áine Kerr