KPMG proposes tax compensation and reform to strengthen gender equality
KPMG has offered Caregiver Income Tax Offset (CARITO) as part of a broader effort to properly value time spent on unpaid work.
CARITO would be a non-refundable tax compensation, deducted from any income tax payable on people who return to work after caring for children, disabled people or elderly relatives.
The maximum amount of CARITO would be calculated as the basic compensatory amount multiplied by the total number of weeks of unpaid care work performed.
“Under this system, where the value of the credit is linked to time spent out of the labor market on family responsibilities, low-income carers would receive a greater proportional benefit when they return to work,” said KPMG.
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“Furthermore, by not phasing out the credit as the recipient’s income increases, additional work and career progression would not be discouraged.
“CARITO would not be gender specific, but since women do most of the care work, it would benefit them the most.”
In a formal sense, only paid work done in Australia is measured and valued. However, when the value of paid and unpaid work is considered, KPMG calculations show that women do just over half of all work done in Australia.
Nevertheless, women face a gender pay gap, a gender income gap and a super gender gap.
“Expecting women to do more unpaid work than men is a social norm inherited from a bygone era. It’s a relic of the days when men were considered the main breadwinners, women being allowed to do paid work to support household income,” a KPMG report claims.
Further, he said the continued economic disadvantage of women will become increasingly entrenched if government policy does not better support faster changing social norms and respond to changing socio-economic expectations.
Another reform advocated by KPMG is to ensure that employers can adopt positive policies to provide higher superpayments and other benefits to female employees.
This recommendation would help close pay and compensation gaps and could be implemented by changing the Sex Discrimination Act to ensure that companies can make higher super-payments for their female employees. Alternatively, develop clear guidelines for employers on how they could apply for exemptions from the law to allow them to pay women higher super contributions.
KPMG Australia Chairman Alison Kitchen said: “Allowing employers to pay higher pension contributions for female employees is an obvious move and would be a continuation of the principles enshrined in the Affirmative Action Act 1986that compel companies to proactively support women’s participation to overcome entrenched social norms.”
“Ironically, this is the landmark Sex Discrimination Act therefore, it is difficult for employers to do so unless they can successfully navigate a lengthy process.
“We encourage the new federal government to revisit this issue.”
In addition to the proposals for a CARITO and an amendment to the Sex Discrimination Act, KPMG reiterated two previous recommendations. These were the payment of pension guarantee contributions under the Commonwealth Paid Parental Leave scheme and increasing the Paid Parental Leave scheme to 26 weeks, with a fairer sharing of leave between partners.