National proposes tax deduction on pre-school childcare

Don Brash

Working parents would be able to claim a tax refund on pre-school childcare under a National government, the party's leader Don Brash said today.

"National will recognise as tax deductible the pre-school childcare costs of working parents up to $5000 per child," he said.

"Costs will be deductible at 33 per cent of out-of-pocket childcare costs. In effect, one-third of childcare costs will be able to be claimed, resulting in a tax refund of a maximum of $1650 per child."

The tax deduction would be available on all forms of childcare -- that provided by registered childcare centres or informal arrangements such as with nannies or other home-based carers that were correctly invoiced for tax purposes.

Dr Brash said the policy would take affect on April 1 next year if National was elected to power.

The policy was estimated to cost $160 million per year.

"National recognises that childcare costs are a serious burden for families," Dr Brash said.

"The basis principle behind this policy is that we regard childcare costs as a legitimate work expense for second-income earners who would otherwise be engaged in childcare, and for employed sole parents."

The deduction would only be available for pre-school care and the next National government would explore what needed to be done about after-school care.

Dr Brash said it would be based on the existing housekeeper rate. That deduction was currently able to be claimed on an annual basis but National would look into whether this could be made more frequent.

Parents would need to keep their receipts from their childcare provider to identify the out-of-pocket expenses incurred.

The Government's proposal for 20 hours free childcare would be stopped by National, which said its tax deduction was a fairer and more flexible way of helping parents.

Existing funding for childcare centres and childcare subsidy rates would remain the same.

- NZPA