If you have a child who has ever been in childcare, I am sure you understand the crazy costs involved! Sometimes it’s difficult to manage these costs on your own, which is why the Government offers two subsidies to help families cover their childcare fees. Currently, these subsidies are the Child Care Benefit (CCB) and the Child Care Rebate (CCR).
It was recently announced that the current subsidies will be changing as of July 2nd 2018. Instead of the the Child Care Benefit and the Child Care Rebate, eligible families will now receive Child Care Subsidy and Additional Child Care Subsidy.
What Changes Are Being Made?
Figuring out where you stand can often be a confusing process, with lots of conflicting information out there! In order to help, we’ve broken down some of the main changes of the new subsidy system in as simple terms as possible!
Child Care Subsidy
First and foremost, the Government will be getting rid of the current system which consists of two subsidies, replacing them instead with a single means and activity tested subsidy, now simply called the ‘Child Care Subsidy’. The new system will see payments made directly to service providers, to then be passed on to families, doing away with the previous multi-payment model.
The activity test will help determine how many hours of childcare per fortnight you will receive subsidised. In in order to receive any subsidy at all, both parents are required to work, study or volunteer for a minimum of 8 hours a fortnight.
- Families working 8 – 16 hours per fortnight are eligible to receive 36 hours per fortnight of subsidised care
- Families working 16 – 48 hours per fortnight are eligible to receive 72 hours per fortnight of subsidised care
- Families working more than 48 hours per fortnight are eligible to receive 100 hours per fortnight of subsidised care
Level Of Subsidy
There will also be a new grading system, which will determine what % of fees you are eligible to receive based on your annual income.
- Families on $65,710 or less will receive a payment equivalent to 85% of their fees
- Families on $65,710 – $170,710 will receive a payment that is tapered down from 85% to 50%, receiving 1% less for every $3000
- Families on $170,710 – $250,000 will receive a payment equivalent to 50% of their fees
- Families on $250,000 – $340,000 will receive a payment that is tapered down from 50% to 20%, receiving 1% less for every $3000
- Families on $340,000 – $350,000 will receive a payment equivalent to 20% of their fees.
- Families earning more than $350,000 will receive no subsidy
It’s important to note that the above %’s are based on an hourly fee cap. You are only eligible to receive a % of the following hourly rates; $11.55 for centre-based day care, $10.70 for family day care, $10.10 outside school hours care. Anything paid above these rates will be out of pocket. For families earning $185,710 and under there will be no annual cap on your total yearly subsidy amount. For those earning more than this amount, it will be capped at $10,000 per year.
Additional Child Care Subsidy
A bonus subsidy, called ‘Additional Child Care Subsidy’ will be available for disadvantaged families. These include families who have children at risk of abuse or neglect, those experiencing temporary financial hardship and grandparent carers who are on welfare. The Additional Child Care Subsidy allows you to claim 100% of the actual fee charged (up to a max of 120% of the hourly fee cap) with up to 100 hours a fortnight.
How Will These Changes Affect Me?
When these changes are implemented on July 2nd 2018, your payments may change alongside your eligibility. Overall, the changes should be positive for most families, aiming to make the system more affordable, accessible and flexible. It will be much simpler than the current multi-payment system, and will be better target to provide more assistance to low and middle income families.
The Government has estimated that 816,000 families will be better off when the new subsidies are introduced, with only 128,000 families looking to be receiving reduced subsidies.
It’s important that you factor in these new changes to your budget so you can anticipate your out of pocket child care expenses. This only estimator is a great tool to help you figure out what subsidy you are likely to receive when these changes are introduced! https://www.education.gov.au/sites/education/files/sch/est/index.html