One thing many parents will agree on when it comes to our children is that the cost of child care can be extremely high. For many parents to be able to return to work after having a child the cost of child care is inevitable, so being able to decipher the new child care benefits will go a long way to helping you budget for the cost of child care.
From 2 July 2018, the government is abolishing the Child Care Rebate and Child Care Benefit. The two payments will be replaced with a single payment, the Child Care Subsidy.
The new Child Care Subsidy is designed to make child care more affordable to low to middle income families.
The new scheme will be implemented with a single means and activity tested subsidy. Three things will determine how much a family receives. First the combined family income, second, how much the parents work, based on the activity of the parent who works the least. Lastly the type of childcare service the family uses.
Families earning $65,710 or less will have 85% of their child care fees covered by the government. The subsidy gradually tapers down to 50% once you are earning $170,710. For those families earning between $170,710-$250,000 you will get 50% of your child care fees covered by the government. For those families earning between $250,000-$340,000 the subsidy will taper down from 50% to 20%. Anyone earning more than $350,000 will not be entitled to any subsidy.
Both parents are required to work, study or volunteer for at least eight hours a fortnight to be eligible for the subsidy. If you don’t meet these minimum requirements you will still be entitled to 12 hours of child care if you earn less than $65,710. If your family’s income is more than $65,710 but you don’t meet the activity test you will not receive any child care subsidy. *
Fee subsidies are based on a set hourly rate ($11.55 centre-based day care, $10.70 family day care, $10.10 outside school hour’s care). If you pay more than this per hour for your child care, you will be required to cover the difference.
There is no annual cap on subsidies for families on $185,710 and under. Those earning more than $185,710 will only be entitled to $10,000 per child.
There are online Child Care Subsidy calculators that you can access to determine exactly how the new childcare benefits will impact your family, and be sure to register for the new Child Care Subsidy and complete the Child Care Subsidy assessment through your myGov account to ensure there is no delay in receiving the new subsidy payments.
*(The above amounts are correct for 2018/19 and may be subject to adjustment through indexation in subsequent years)
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