Understanding how Child Care Subsidy works in Australia is important for ensuring accessibility and affordability for families who need to access child care services. Here is everything you need to know about this beneficial government payment.
Hi Everyone. This article is a guest post written by Liz from Teaching Brave at www.teachingbrave.com. Liz is an early childhood teacher and director of multiple Sydney child care centres, as well as a budding writer since she started her own website this year. I’ve gotten to know Liz a bit over the past year, and have been helping her with her website build. I am really enjoying the content she produces on early childhood and parenting in general, as well as her journey to Financial Independence. She has done incredibly well to run her site with her total views hitting the tens of millions with some viral posts on social media, as well as her ability to juggle full time work with being a single mum. I think this struck a chord with me as I came from a single parent household, so I can really identify with some of her struggles as a single mum as our family went through a lot of the same stuff too. She is an expert on early childhood matters and is very savvy financially, especially when it comes to things like family tax benefits and child care subsidies. We actually had a great chat about the Child Care Subsidy, so I asked her if she would mind putting it in writing for the blog – and she did! Enjoy
Introduction to Child Care Subsidy
In today’s society, access to quality child care services has become more important than ever. There are a myriad of reasons why families decide to send their children to child care and approved services are now being more widely recognised as ‘early learning’ opportunities for children that offer far more than just child-minding services. Whilst this is certainly a step in the right direction, child care can also come with quite the hefty price tag so our government has put into place some supports aimed at making access to child care more affordable for families.
Child care fees have been subsidised in different ways over the years and recent changes have caused much confusion for parents and caregivers across Australia. In a world where child care services are in higher demand than ever, it is important to understand how the system works to make sure you receive the full amount you are entitled to so that affordability does not limit your access to these vital services. Below we unpack the Child Care Subsidy and provide detailed information about eligibility and how to apply.
What is a child care subsidy payment?
Child Care Subsidy (CCS) is a payment from the government to assist with the cost of accessing approved child care services. The term ‘approved’ is important here because there are indeed some forms of child care that do not meet the requirements of approved services and therefore attending a non-approved child care service will prevent you from qualifying for the CCS.
The four main types of approved child care service providers include centre-based child care, out of school hours care services (OSHC), family day care and in home care. If you would like to read more about approved child care providers, the following website provides detailed information: Service approval – Department of Education, Skills and Employment, Australian Government (dese.gov.au)
How much is the child care subsidy in Australia?
The following table is available on the human services Australia website and details how much Child Care Subsidy percentage a family can expect to receive based upon their total combined income. Child Care Subsidy – Your income can affect it – Services Australia
|Your family income||Child Care Subsidy percentage|
|$0 to $69,390||85%|
|More than $69,390 to below $174,390||Between 85% and 50%|
The percentage goes down by 1% for every $3,000 of income your family earns
|$174,390 to below $253,680||50%|
|$253,680 to below $343,680||Between 50% and 20%|
The percentage goes down by 1% for every $3,000 of income your family earns
|$343,680 to below $353,680||20%|
|$353,680 or more||0%|
If you are a family who estimates that your combined income will likely be over $353,680, you can still claim the CCS. If you end up earning less than you have estimated, then you will be paid the subsidy you are entitled to when payments are balanced at the conclusion of the financial year. For this reason, it is worthwhile applying even if you think that you might earn too much to qualify.
What determines my level of child care subsidy?
There are several factors that determine how much a family will receive in terms of their Child Care Subsidy. The combined family income, the hourly rate cap that is based on the type of approved child care being utilised, and the hours of activity for both parents will be examined to determine exactly just how much that family will get.
Your family’s income estimate is a significant factor in determining your CCS eligibility, so it is important that these details are recorded accurately with Centrelink. At the conclusion of each financial year, the amount of income that you have estimated will be compared against your actual earned income that has been reported to the Australian Tax Office (ATO). Balancing these figures will determine any adjustments that need to be paid to you or any overpayments that need to be paid back. To avoid the risk of a potential overpayment, it is a good idea to slightly overestimate your expected income rather than run the risk of having to pay any money back at the end of the financial year.
How does child care subsidy percentage work?
Your Child Care Subsidy comes in the form of a percentage and you can see from the previous table above how this is calculated depending on what income bracket your family fits into. The CCS percentage will either apply to the hourly fee that is paid to the child care provider or the relevant hourly rate cap…whichever is lower.
What is the hourly rate cap on Child Care Subsidy?
For children under school-age, the hourly rate cap on CCS has been set at $12.20 per hour for approved centre-based services and OSHC services. This figure drops to $10.67 per hour for children that are over school-age. The hourly rate cap is slightly lower for family day care services ($11.30) and significantly higher for In Home Care services ($33.17) If the approved child care service has an hourly fee that is less than $12.20, then this lower amount will be used in determining the CCS rather than the standard hourly rate cap. Whilst this all might sound a bit confusing, your child care provider should have a very good understanding of how all of this works and will be able to help you understand just how much your CCS will be when accessing their service.
Is there a cap on Child Care Subsidy?
If you family earns $189,390 or less, the annual cap on CCS will not be applied. If your family earns between $189,390 and $353,680, an annual cap of $10,560 per child will be applied for each financial year.
To reduce the likelihood of an overpayment, 5% of your CCS will be withheld by Centrelink but you are also able to adjust this amount to suit your individual family circumstances. To adjust how much of your CCS is withheld, visit your Centrelink online account through the MyGov website or phone the Centrelink families line on 136 150.
Can you get 100% CCS?
In some circumstances, families may be eligible for the Additional Child Care Subsidy (ACCS) payment. This payment aims to ensure that the most vulnerable children in our communities have a strong start and is designed to help parents move into employment.
The Additional Child Care Subsidy payment will top up the Child Care Subsidy to provide assistance for families to support:
– Child wellbeing
– Temporary Financial Hardship
– Transition to work
Eligible families may receive up to 120% of the child care subsidy hourly rate cap for up to 50 hours of approved child care per week. If you would like to know more about the Additional Child Care Subsidy to determine your eligibility, visit the following website: Additional Child Care Subsidy – Department of Education, Skills and Employment, Australian Government (dese.gov.au)
How Do I apply for Child Care Subsidy?
First you will need to apply for a CRN (Customer Reference Number) for your child, and provide your own number and your child’s number to the approved child care service.
The Services Australia website has been designed to guide parents and caregivers through the process of applying for Child Care Subsidy. This process will also support you to firstly determine your eligibility before proceeding through the online platform. If you are wanting to apply for CCS, click on the following link to begin your application: Child Care Subsidy – How to claim – Services Australia
Once you have applied for CCS and provided your CRN’s and your child’s IHS Iimmunisation History Statement) to the approved child care service, you will need to go into your MyGov account to confirm your child’s enrolment at the approved service. This should then allow the CCS to be applied to your child’s account at the service. If you are having difficulties or the CCS is not being applied, you can ask the Centre Director for assistance, or call Centrelink.
How Do I know if I’m eligible for CCS?
You might be eligible to receive CCS if you or your partner meet all of the following criteria.
– If you care for your child at least two nights per fortnight or have 14% of care.
– If you are liable for the fees associated with care that is being provided at an approved child care service
– If you meet the residency criteria
In addition to these requirements, your child must also be fully up to date with the legal immunisation requirements and not be attending secondary school (unless an exemption is in place). Parents with a child who does attend secondary school may be eligible to receive CCS if their child is aged 13 or under, or if they are aged 14-18 and have a disability. You can read further information about CCS eligibility here: Child Care Subsidy – Who can get it – Services Australia
Can absences affect Child Care Subsidy payments?
There are certainly times when children are not able to attend a booked child care session and generally parents are not penalised for this. Each child is allowed a total of 42 absent days that can be used without needing to provide any kind of evidence for the absence. These days can be used at times when a child would normally attend and receive CCS, including public holidays, absence due to illness and a wide range of other family circumstances.
If the child care service is temporarily closed for some reason, you may not have to pay the gap fee. In cases where an enrolment is cancelled, the CCS will stop being paid. This can also occur if a child has been absent from child care for 14 weeks in a row or if the child care service claims that the child is no longer attending.
How does child care subsidy affect taxes?
At the end of a financial year, your adjusted taxable income will be used to determine your eligibility for certain payments and services. Taxable income relates to the total income minus any allowable deductions and is the income that you pay tax on. This includes monies such as wages and salaries, investments and Jobkeeper payments. Income that is lower than the tax-free threshold still counts as taxable income even though you may not be required to pay tax.
There are several payments that individuals can receive that are not considered taxable income. These include Family Tax Benefit, Economic Support Payment, Child Care Subsidy and Additional Child Care Subsidy. This means that receiving CCS will not have an impact on your taxes.
Summary of Child care Subsidy
Whilst all of the CCS information might sound confusing, the whole process is certainly more straightforward than our previous child care benefit and rebate system was. Having the one CCS percentage is much easier to calculate and once your application is complete, there shouldn’t be any real issues in terms of receiving your CCS. By making access to approved child care options affordable for families, children are able to engage in early learning programs that will set them in good stead for a lifetime of learning. If you have been considering sending your child to child care but aren’t sure where to start, the CareforKids website provides much useful information for families – including a tool for searching local approved child care providers. You can access this valuable information here: The way Australian families find child care – CareforKids.com.au.
If you want to learn more about Early Childhood education, head over to Liz’s blog at Teaching Brave which I have found to be a great source of information from an expert in the field.
Who is Liz from TeachingBrave?
My name is Elizabeth. I’m a single mum, an Early Childhood Teacher and Director, and I’m the person behind TeachingBrave.com
My blog www.teachingbrave.com has more than 50 articles with parenting tips, my single parenting advice, early childhood related articles and my personal money struggles and money journey. You can also follow me on Instagram (@teachingbrave) and Facebook.
When my son Andy was 3 years old, his father left us and I had to navigate my way as a newly single mum working full time, with no money, and no family support. I made sacrifices, I made a vow to be the best mum I could possibly be and I refused to settle for a future of financial struggle. I made some big changes, side hustled hard, I saved as much money as I possibly could and I’m so proud of my personal money journey from then, until now.
I now live in an apartment in Sydney with my son Andy, I have built my Net Worth to $336,978, I am proudly consumer debt free, have built my Emergency fund to $12k, started investing in shares, and I’m working hard on building my teachingbrave blog to share my professional knowledge, my experiences and to help other single parents out there to know they don’t have to live a life of struggle. I am teaching my son about money, about interest, the dangers of personal debt and taking care of your money so he has a level of financial literacy that I never grew up with.
CaptainFI was one of the first FI/RE bloggers that I discovered and I have gained so much financial knowledge from reading his articles and reviews and he inspired me to begin my investing journey, as well as helped me with so many frugal living tips!
Child Care Subsidy (CCS) is something that I deal with on a day to day basis in my role as a child care director and it seemed appropriate to share my article here on CaptainFI to help other parents with any questions they may have regarding the CCS, the rules, eligibility and entitlements.