The federal government will introduce last minute legislation next week to prevent low paid Church and charity workers from losing family tax entitlements.
The Sydney Morning Herald reports changes to salary sacrificing laws that were to begin on July 1 meant people working for organisations such as charities and non profit health organisations would have benefits that they were once able to salary sacrifice treated as income.
This was because of a revamp of the child support system brought in by the previous government, and supported by Labor when it was in opposition, to stop people minimising their income in order to pay less child support.
But Cabinet decided last night to reverse the changes to prevent low paid workers from being worse off.
"The amendments will restore the use of net reportable fringe benefits in income definitions for family assistance," the Minister for Family and Community Services, Jenny Macklin, said.
"This will make sure people working in the not for profit sector looking after and working with some of the most vulnerable people in our communities … will not suffer a loss of family tax benefits or other family assistance payments after July 1."
The Government has this week struggled to work out how to solve the problem as Centrelink sent out thousands of letters telling workers they would be stripped of their family payments, effectively delivering a pay cut of $100 a fortnight.
It made the point repeatedly that the policy was devised by the Howard government even though Labor fully supported it while in Opposition.
Catholic Social Services Australia’s Executive Director, Frank Quinlan, said a lot of workers in the charitable sector will wake up reassured by the news.
"We are pleased to see that the Government has recognised and is acting quickly to address the anomalies," Mr Quinlan said.
"I am sure that if these measures are reversed in legislation next week, none of our workers will be worse off.
"It is also encouraging to see the Treasurer has recognised the inordinate complexities in the tax treatment of the community sector.
"We are encouraged that the Treasurer is asking Ken Henry to review these issues and find ongoing solutions to the problem," Mr Quinlan said.
Mr Quinlan said he hopes the legislation will receive bipartisan support so the Centrelink changes can be put in place as quickly as possible to prevent any underpayments of charitable sector staff on July 1.
Relief for low-paid charity helpers (Sydney Morning Herald, 20/6/08)
Catholic Social Services Australia welcomes the government's quick action on family tax benefits for charity workers