Media Release - Tax Changes Will Damage Charitable Sector

Catholic Social Services Australia's Executive Director, Frank Quinlan, said today that proposed changes to the tax system will inadvertently capture thousands of low paid charity workers and their children in its web.

Mr Quinlan said charities and other non government organisations have used salary packaging to compensate workers for low wages.

"The changes will have the biggest impact on workers with children," Mr Quinlan said.

"Many workers and families with salary packages could be out of pocket by as much as $50 a week or more. This is especially significant in the face of the rising cost of petrol, food and housing.

"The people who will be hardest hit by the proposed changes are providing crucial services in the charitable sector.

"They often work because they are committed to helping the public, even though they could attract higher salaries in private industry or the public sector.

"We are already under great pressure to attract and retain workers, because of low salaries across the sector.

"These changes will make it much harder for our agencies to retain these workers in our struggling workforce.

"Many employees of charitable organisations can currently package up to $16,049 of their salary effectively increasing a salary of $45,000 to $52,149 in the marketplace.

"But under the proposed legislation, a salary of $45,000 will be deemed to be $58,951 for the purpose of determining eligibility to government benefits. This change will effectively treat low income people as if they are earning an income which would be taxed at the top tax marginal rate. Currently, people on over $150,000 are taxed at this rate.

This anomaly needs urgent attention.
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"The proposed legislation will effectively change the income definition for a number of family assistance benefits," Mr Quinlan said.

Schedule 6 of the Families, Housing, Community Services and Indigenous Affairs and Other Legislation Amendment (2008 Budget and Other Measures) Bill 2008 will impact on Family Tax Benefits A and B and the Child Care Benefit, effectively raising the employee's salary for purpose of assessment for eligibility of these payments.

"We are delighted to hear that the Government is giving this matter its urgent attention and look forward to a positive solution for community sector workers and their families," Mr Quinlan said.

Catholic Social Services Australia provides services to over a million Australians each year through its 64 member agencies in remote, regional and metropolitan Australia.

17 June 2008

CONTACT Judith Tokley 02 6285 1366 / 0408 824 306