In our article, ‘A helping hand: Child care benefit and rebate’, we noted that there was an upcoming change to the Government’s current financial assistance payments provided to eligible families in recognition of the costs associated with child care. Namely, from 2 July 2018, the Child Care Benefit and Child Care Rebate will be replaced with a new financial assistance payment, the Child Care Subsidy.
Given the fast approaching date, we have provided you with an overview of the Child Care Subsidy regarding eligibility, payments and transitioning/claiming.
Child Care Subsidy
To be eligible for the Child Care Subsidy, certain general requirements must be satisfied. For example:
- Your child needs to be attending an approved child care provider. Also, your child must,
- Be 13 years of age or under and not attending secondary schooling (exemptions may apply, for example, where your child has a disability).
- Meet immunisation requirements.
- You must care for your child at least two nights per fortnight, or have 14% care.
- You must be the person responsible for paying the child care costs.
- You meet the residency requirements.
The Child Care Subsidy is paid directly to your approved child care provider to reduce the child care costs you pay. Furthermore, the level of Child Care Subsidy that you may be entitled to is assessed against several interconnected factors: combined family income; activity test (the activity level of parents); and, hourly rate cap applied in relation to the child care service type and age of your child.
1. Combined family income (your estimate for the 2018/19 financial year).
|Combined family income|
|Family income thresholds*||Child Care Subsidy percentage^|
|Up to $66,958||85%|
|Over $66,958 to under $171,958||85% – 50%#|
|$171,958 to under $251,248||50%|
|$251,248 to under $341,248||50% – 20%#|
|$341,248 to under $351,248||20%|
|$351,248 or more||0%|
*These thresholds may be subject to indexation in following years.
^The Child Care Subsidy percentage will apply to the lowest of: the hourly fee you’re charged by your approved child care provider; or, the applicable maximum hourly rate cap (discussed below).
#The Child Care Subsidy percentage reduces by 1% for every $3,000 of income your family earns.
- If your combined family income is more than $186,958 and under $351,248, you will be subject to an annual subsidisation cap of $10,190 per child each financial year. However, if your combined family income is $186,958 or less, an annual subsidisation cap will not apply.
- A percentage of the Child Care Subsidy is withheld. At the end of the financial year, Centrelink will compare your estimated income with your actual income. Depending on their determination, the withheld amount will either be paid directly to you (for overestimated income) or used to reduce an overpayment debt (for underestimated income).
- You can still claim the Child Care Subsidy if your combined family income estimate is $351,248 or more. Whether you will be entitled or not to the Child Care Subsidy will depend on your actual income at the end of the financial year.
2. Activity test, the activity level of parents (your estimate for the 2018/19 financial year).
|Activity level of parents|
|Hours of activity (per fortnight)*||Maximum hours of subsidy (per fortnight)|
|Families earning up to $66,958|
|No activity hours required||24 hours|
|Families earning up to $351,248|
|8 to 16 hours||36 hours|
|More than 16 to 48 hours||72 hours|
|More than 48 hours||100 hours|
*Recognised activities include things, such as paid work (including self-employment), paid or unpaid leave (including paid or unpaid parental leave), unpaid work experience or internship, study and training, unpaid work in a family business, actively looking for work or setting up a business, and unpaid volunteering.
^Part of the Child Care Safety Net (discussed below), namely, subsidised care for low-income families.
- The hours of activity per fortnight is based on the parent with the lowest level of activity.
- If you have casual or irregular hours of work, an estimate is required. For example, to ensure the required care is available, you could use the highest number of hours you expect to work per fortnight over the next 3 months, and adjust the amount online if your hours change.
- If you do multiple recognised activities, you can combine these hours. Also, travel time between the approved child care provider and your recognised activity can also be included.
- Some activities do have a limitation imposed on them. For example:
- Periods of unpaid leave (excluding unpaid parental leave) or setting up a business for up to six months.
- Volunteering or actively looking for work will provide eligibility for up to 36 hours of subsidy per fortnight.
- There are exemptions to the activity test. For example, but not limited to the following:
- Access to 36 hours of subsidy per fortnight,
- Child attends an early education program (preschool) in centre based day care.
- Access to 72 hours of subsidy per fortnight,
- You receive the Carer Allowance and you do not have a partner that qualifies for less activity hours.
- Access to 100 hours of subsidy per fortnight,
- Receiving the Carer Payment or would qualify, except for the income or assets test requirements.
- Temporarily outside of Australia (limited to six weeks).
- Receiving Disability Support Pension.
- Grandparent/great-grandparent is a principal carer (not receiving income support).
- Recipients of Parenting Payment who are exempt from mutual obligation requirements, provided the exemption is not in recognition of child care responsibilities (e.g. home schooling).
- Access to 36 hours of subsidy per fortnight,
- The Child Care Subsidy may still be paid if you're charged for child care when your child is absent on a day that they would have usually attended. The general annual limit is 42 absences per child, per financial year; however, you may be entitled to additional absence days in certain circumstances.
3. Hourly rate cap
|Hourly rate caps|
|Child care service type||
Maximum hourly rate cap
(Children below school age)
Maximum hourly rate cap
Centre based day care
(Long day care and occasional care)
|Outside school hours care||$11.77||$10.29|
Family day care
(Before, after, and vacation care)
|In home care||$25.48 (per family)||$25.48 (per family)|
*A school-aged child is a child who is: in school, including being home schooled; or, 6 years or older.
- The Child Care Subsidy percentage will apply to the lowest of: the hourly fee you’re charged by your approved child care provider; or, applicable maximum hourly rate cap.
- In terms of the hourly fee, if your approved child care provider charges a daily session rate (as opposed to an hourly rate), divide this by the number of hours in the session. Importantly, the number of hours in a session may not be the number of hours your child attends child care.
For families that currently receive the Child Care Benefit and Child Care Rebate, the transition to the Child Care Subsidy is not an automatic process. Prior to 2 July 2018, you will need to complete the ‘Child Care Subsidy Assessment’ task using your Centrelink online account through myGov. This will require you to provide some new information as well as confirm your current details.
Importantly, if your child is starting approved child care from July 2018, a similar process to the one listed above will need to be completed if you wish to claim assistance with child care fees.
Please note: If you do not complete the required assessment, the Child Care Subsidy will not be paid to your approved child care provider.
Child Care Safety Net (Additional Child Care Subsidy)
Depending on your circumstances, you may also be eligible for further financial assistance on top of the Child Care Subsidy via the Child Care Safety Net (Additional Child Care Subsidy). For example:
- A subsidy equal to the hourly fee charged (up to 120% of the applicable maximum hourly rate cap), for up to 100 hours per fortnight (exempt from activity test requirements). In the following circumstances,
- Grandparents in receipt of income support who are the principal carer of grandchildren.
- Families who are experiencing temporary financial hardship; however, the support will be provided for a maximum of 13 weeks per event.
- A subsidy of 95% of the hourly fee charged (up to 95% of the applicable maximum hourly rate cap); the activity test will determine the hours of subsidy. In the following circumstance,
- Parents transitioning to work from income support. Furthermore, the subsidy may continue to be received for 12 weeks after gainful employment and the cessation of income support.
Please note: You can only receive one type of Additional Child Care Subsidy. If you meet the relevant criteria for more than one type, the most beneficial will be applied.
Financial assistance payments in recognition of the associated costs of child care can be important for eligible families, especially with regards to managing household expenditure and the consideration of returning to work after having children (e.g. help with making the transition back to work easier).
We hope you have found this article helpful in terms of highlighting the eligibility, payments and transitioning/claiming with regards to the Child Care Subsidy, which is due to commence from 2 July 2018.
Prior to 2 July 2018, if you would like to estimate your possible Child Care Subsidy entitlement, you can do so via Centrelink’s Payment and Service Finder.