Childcare subsidy is changing. Here’s what you need to know and how these changes will impact your family’s budget as of July 2018.
Your childcare subsidy will change dramatically
Gone are the days of the confusing Childcare Rebate and Childcare Benefit schemes.
Childcare Benefit is a means-tested payment which is usually paid directly to your childcare. It is impacted by the income of the child’s caregivers and whether they’re currently engaged in paid work or not (paid maternity leave is considered paid work). It can vary greatly depending on the above factors. Children must be up to date with their immunisations or be on a catch-up schedule to quality.
Childcare Rebate is NOT means-tested. Everyone is entitled to it (providing that immunisations are up to date). It covers 50% of your childcare costs until you hit a cap of $7,613 PER child in care.
Many families take a hit in the closing months of the financial year once they are over the Childcare Rebate cap. Considering the high costs of daily childcare, it’s no wonder! $7,613 sounds like a lot but when a daily fee can be as high as $130 it can be reached quite quickly – leaving many families questioning whether it’s worth both parents working.
How will the Childcare Subsidy be different?
The Childcare Subsidy (in effect from 2nd July 2018) will be ONE means-tested subsidy. It will be paid directly to your childcare provider and has been designed to give lower and middle class families, in particular, a much-welcomed financial buffer.
Families who have a combined household income of less than $185,710 per year will no longer be subjected to the cap that existed with CCB/CCR. Families who earn between $185,710 and $350,000 will have a cap that will be increased to $10,000 per year per child.
How is the Childcare Subsidy calculated?
The Childcare Subsidy will be determined through a number of tests.
1. Combined family income.
This table shows the percentage of child care fees the Government will contribute based on a family’s combined income:
2. Activity Test
The activity test looks at how many hours per fortnight of care that families are entitled to.
- 8-16 hours of activity: 36 hours of care
- 16-48 hours of activity: 72 hours of care
- 48 hours + of activity: 100 hours of care
“Activity” can mean:
- paid work, including leave
- being self employed
- doing unpaid work in the family business
- training courses for the purpose of improving the individual’s work skills or employment prospects
- an approved course of education or study
- volunteering
- actively looking for work
- time taken to travel between childcare facility and place of work, activity or study
Low income families on $65,710 or less a year who do not meet the Activity Test will be able to access 24 hours of subsided care per fortnight without having to meet the Activity Test, as part of the Child Care Safety Net.
3. Service type
The type of childcare service your child is in (family daycare, centre based, OSHC) will impact the hourly rate that the government will subsidise.
Care in the family home
The government is also changing the nanny in-home care pilot program so it can be accessed by more families. You can find more information online here or read our article here.
Test the childcare subsidy for yourself
Here is an online test to see how much money the childcare subsidy will save you.
