Financial Advice Blog

Child Care Subsidy: A simple guide

Check out our simple guide to the Child Care Subsidy to quickly understand how it will impact your family and what you need to do to receive it.

The Australian Government’s Child Care Subsidy can be difficult to get your head around so we have simplified it for you here. Read our simple guide to the Child Care Subsidy to quickly understand how the subsidy will impact your family.

Who can get Child Care Subsidy?

In order to be eligible to receive a Child Care Subsidy the following criteria must be met:

  1. Parents must have care of their child at least two nights per fortnight or have 14 percent share of care
  2. Parents must be liable for childcare fees at an approved childcare service
  3. Parents must meet residency requirements
  4. Children must meet immunisation requirements
  5. Children must not be attending secondary school*
  6. Children must be 13 years or under*

*Exceptional circumstances may apply

How much Child Care Subsidy can I get?

The amount of Child Care Subsidy your family will receive will depend on three things:

  1. Combined family income
  2. Number of children in care
  3. An activity test
  4. The type of child care service your child attends

We expand on each of these factors below.

1. Combined family income

The percentage of subsidy you are eligible for is based on your family’s annual adjusted taxable income.

Child Care Subsidy rates (from 10 July 2023)

Family income Subsidy rate
$0 to $80,000 90%
More than $80,000 to below $530,000 Decreasing from 90%

The percentage decreases by 1% for every $5,000 of income a family earns

$530,000 or more 0%

2. Number of children in care

Families earning under $362,408 with more than one child aged 5 or under in care can get a higher subsidy for their second child and younger children.

The rates for each child are worked out using two separate income tests. The ‘standard rate child’ is usually the eldest CCS eligible child aged 5 or under. From 10 July 2023, the standard rate child will get the standard CCS rates. The ‘higher rate child’ is the second and any younger children aged 5 or under. The higher rate is calculated using the rate for second and younger children.

Subsidy rates for multiple children

Combined family income Second and younger children subsidy rate
$0 to $138,118 95%
More than $138,118 to below $183,118 Decreasing from 95%

The percentage decreases by 1% for every $3,000 of income a family earns

$183,118 to below $262,408 80%
$262,408 to below $352,408 Decreasing from 80%

The percentage decreases by 1% for every $3,000 of income a family earns

$352,408 to below $362,408 50%
$362,408 or more Higher CCS rates no longer apply, all children in the family will receive the standard CCS rate

3. Activity test

The number of hours of subsidised care you received is based on the number of hours of activity you do.  For couples, entitlement is based on the partner doing the lower amount of activity.

‘Activity’ is defined as one, or a combination, of the following:

  • Paid work
  • Self-employment
  • Actively setting up a business
  • Study and training
  • Unpaid work in a family business
  • Unpaid work experience or internship
  • Looking for work
  • Volunteering
  • Authorised leave (including annual leave, paid or unpaid parental leave, long service leave)
  • Other activities considered on a case-by-case basis

Certain conditions apply to particular activity types.  For example, setting up a business is only recognised as a qualifying activity for 6 out of every 12 months.  Check out the government’s recognised activity list for more information.

Eligible hours based on activity

Hours of activity Subsidised hours per child per fortnight
Less than 8 hours Maximum of 24 hours if you earn below $72,466 (if you earn above $72,466 are not eligible)
Between 8 – 16 hours Maximum of 36 hours
Between 16 – 48 hours Maximum of 72 hours
More than 48 hours Maximum of 100 hours

4. The type of child care service your child attends

The maximum hourly rate the Government will subsidise is based on the type of childcare service.

If your service charges a daily session rate, divide this by the number of hours in the session to get the hourly fee.

Maximum hourly rate caps

Childcare service type Subsidised hourly rate cap
Centre based day care (long day care and occasional care) $13.73 per child
Family day care $12.72 per child
Outside of school hours care (i.e. before and after school care and vacation care) $13.73 per child
In home care $37.34 per family

How will the Child Care Subsidy affect my family?

The Child Care Subsidy will affect different households with varying impacts. To see exactly how much subsidy your family will receive so you can prepare and budget, visit the government’s Child Care Subsidy Estimator.

The Government will in some cases provide extra support through the Additional Child Care Subsidy. You may be eligible for this if you are experiencing temporary financial hardship, transitioning to work or a grandparent with primary care.

How will the 2023-24 Federal Budget changes will affect my Child Care Subsidy?

The Government has announced changes to the Child Care Subsidy as part of the 2023-24 Federal Budget.  The changes are designed to make childcare more accessible for families and encourage the primary carer greater participation in the workforce.  The changes will come into effect on 10 July 2023.

From 10 July 2023, the following will apply:

  1. If your family earns less than $80,000 per year, the amount of subsidy you receive for child care will increase from 85% to 90%.
  2. Families earning under $530,000 per year will now be eligible to receive child care subsidy rates. For every additional $5,000 your family earns over $80,000, your child care subsidy rates will decrease by 1%.
  3. Families with more than one child aged 5 or under can still receive a higher rate of subsidy for their second and younger children.
  4. First Nations children will be eligible for at least 36 hours of subsidized care per fortnight.
  5. Families can receive additional subsidized hours of child care based on their circumstances. This means that if your family has specific needs or circumstances that require more child care hours, you may be able to receive extra support.

If you already get the Child Care Subsidy, you don’t need to do anything to access the increased rates.  These will be applied automatically from 10 July 2023.

How do I receive the Child Care Subsidy?

To ensure you receive the Child Care Subsidy, it’s important that you complete an online Child Care Subsidy assessment using your Centrelink online account through MyGov.

It’s important to inform Centerlink of any changes to your family’s circumstances to avoid an overpayment requiring you to pay back the ATO at tax time.  This includes if your family’s income or activity levels change, or your relationship status changes.

 

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