Nick Xenophon (SA, Independent) Share this | Link to this | Hansard source

My question is to the Minister representing the Treasurer, Senator Conroy. It relates to the tax deductibility status of public donations for the building and refurbishment of not-for-profit, private childcare centres, of which there are some 100 in South Australia. I have been contacted by the director of a not-for-profit childcare centre in Adelaide. This centre has not had any refurbishment for over 30 years. The location and demographic make-up of the centre has made it difficult for them to access grants for undertaking these refurbishments. Moreover, not-for-profit childcare centres generally do not receive any direct government subsidies. Last year the centre’s leadership launched a fundraising drive with parents to raise the funds to make the necessary improvements for high-quality care and learning environments. These changes would also allow them to address the significant demand and long waiting list for child care, which is a problem in their community, as it is in many other Australian communities. However, the director of the centre was informed by the tax office that these donations would not be tax deductible. Can the minister confirm that there is no tax deductibility for donations to not-for-profit childcare providers? And does he agree that deductibility for donations would be an incentive for the public to donate?

Stephen Conroy (Victoria, Australian Labor Party, Deputy Leader of the Government in the Senate) Share this | Link to this | Hansard source

I thank Senator Xenophon for the advance notice of the general theme of his question. Tax deductibility is a tightly targeted concession. Organisations that can accept tax deductible gifts are characterised by the broad benefits that they bestow to the public. To accept tax deductible gifts an organisation must be either endorsed by the tax office as a deductible-gift recipient, a DGR, under one of the general categories or specifically listed in the tax law. The general categories include universities, overseas aid organisations, public hospitals and public ambulance services. These categories are partially administered by the Commissioner of Taxation. None of the general DGR categories cover child care. The parents of children in child care receive more than an incidental private benefit. In addition, providing not-for-profit childcare centres with DGR status could raise integrity concerns if centres reduced fees and solicited tax deductible donations from parents instead.

For similar reasons schools cannot collect tax deductible donations. As charities, not-for-profit childcare centres can access a range of tax concessions, including income tax exemption, GST charity concessions and FBT concessions. In 2004, gift deductibility was extended to state and territory playgroup associations and the federal playgroup association. Playgroups provide a low-cost facility which assists small children, especially those who may otherwise be socially isolated and disadvantaged because of disability or low-socioeconomic status. The childcare tax rebate and childcare benefit both help families with the cost of child care. The childcare tax rebate covers 50 per cent of out-of-pocket childcare expenses for approved child care, up to $7,500 per child per year, for eligible families. (Time expired)

Nick Xenophon (SA, Independent) Share this | Link to this | Hansard source

Mr President, I ask a supplementary question. Given the minister’s answer, when will the government consider providing capital grants funding for childcare centres?

Stephen Conroy (Victoria, Australian Labor Party, Deputy Leader of the Government in the Senate) Share this | Link to this | Hansard source

I might just finish with the other information that I was providing as well as address the supplementary question. The government also provides a range of programs to improve access to child care for families in areas where the market would otherwise fail to provide child care. There is the review panel for the Australian future tax system review, otherwise known as the Henry review. This issue falls within the scope of Australia’s future tax system review and the review panel will provide its final report on the tax and transfer system to the Treasurer by the end of 2009. On the specific issue you have just raised, I am happy to take that on notice and, if there is any further information that the Treasurer is able to provide, I will get back to you.

Nick Xenophon (SA, Independent) Share this | Link to this | Hansard source

Mr President, I ask a further supplementary question. In light of the tax breaks for contributions to school building funds, can the minister explain to Australian parents why not-for-profit childcare centres cannot benefit from similar provisions?

Stephen Conroy (Victoria, Australian Labor Party, Deputy Leader of the Government in the Senate) Share this | Link to this | Hansard source

I thought I addressed some of that issue a little earlier. As I mentioned, the general issue that you are raising will be considered within the scope of the Henry review. I am sure Dr Henry would welcome another submission. He has received only a few and he does not have much on his plate at the moment! I am sure Dr Henry would welcome a submission along the lines you have described. It will be considered fully by the Henry review, which will report at the end of the year.