Women spend 64.4 per cent of their average weekly working time on unpaid care work, in contrast to men who spend 36.1 per cent and when we run that as a comparison to the gender pay gap, as of November 2020, it sat at 13.4 per cent, according to the Workplace and Gender Equality Agency.
This implies that women are doing more than men at far less pay. By acknowledging care work for what it is – work – companies may remunerate women for this additional load that they carry and this will close the gender pay gap, fairly compensate women for all that they do, and award companies a greater level of loyalty and allegiance from entire family units and not just the employee, if it’s the man of the house.
Let’s take a closer look at things as they currently stand; women retire with approximately half of the superannuation of men, and women aged 55 years and older are the fastest-growing group of homeless Australians, according to the Australian Human Rights Commission’s Older Women’s Risk of Homelessness: Background Paper (2019).
Women are not paid at the same rate as men, being more likely to take on caring roles and are therefore more likely to have part-time roles resulting not only in smaller pay packets, but significantly smaller retirement balances, than their male counterparts. Unfortunately, this not only impacts women during their working years, it impacts them in retirement.
One of the biggest stumbling blocks for gender equality lies in the outdated structures of tax laws.
The role of family taxation in gender equality
Let’s say a business employs key team members in operational roles, these salaries are tax-deductible because they fall within the relevant parameters being “necessarily incurred in carrying on a business for the purpose of gaining or producing your assessable income”.
Looking at the benefits of acknowledging the sacrifices that domestic partners make so that their spouses can make meaningful contributions to the business, the company wants to acknowledge the role that those employees’ partners play in its profitability, through remuneration. The benefit to the company is that the employed spouse feels freer to dedicate more into the role. The company gains the support of the spouse and reduces the pressure on the employee to try and keep two separate parties happy – it aligns the family’s loyalty to the business in a healthy and rewarding way.
If the business pays part of the key team member’s salary to the partner, this falls foul of laws prohibiting wage splitting, and the business then considers employing these partners. This would have multiple benefits for the employee and their family unit: the employee would pay less tax, the partner has financial independence, and the family unit has greater borrowing power.
The business benefits because the employee’s partner feels valued and appreciated that in turn makes that partner happier to support the employee in their operational role. As a result, the employee is more productive and you have increased employee loyalty and a competitive edge to talent acquisition.
While a company can generally claim a tax deduction for salaries or wages, that deduction must be “necessarily incurred in carrying on a business for the purpose of gaining or producing your assessable income”. While partner wages arguably fall within that scope, the legislation goes on to specifically state that you cannot deduct expenses of a “private or domestic nature”, which vetoes the whole idea.
The solution: Change the tax laws and introduce family taxation
By taxing couples as a family unit rather than as individuals, if they choose this route. The opportunity for choice must exist, some people would be very uncomfortable with the idea of having to share their income.
The income shared with the spouse would be taxed at the spouse’s marginal tax rate and not at the tax rate of the individual earning the income. The split income would need to go into a separate bank account for the spouse. It could also be split 50/50 if the spouse isn’t working, or, if the spouse had a lower income so that total household income is split 50/50.
Under our model, super should be paid on the income split with the spouse to boost their retirement savings. Any split super could not then be split any further to ensure that the objectives of the initiative are upheld.
Additional benefits of amending the tax laws
Would we achieve gender equality faster than the 100-year time frame that is talked about?
Sonia Gibson is the founder and owner of Accounting Heart.
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