Subsidy for Childcare; Everything you need to know

Subsidy for childcare helps reduce the financial burden of childcare costs for Australian families. So what exactly is the Child Care Subsidy all about? Who is eligible? How can you claim it? What changes came into place from March 2022? Read on..

Introduction to Subsidy for ChildCare

Child care can support the development and strengthening of important social, emotional and communication skills. However, child care isn’t affordable for many. The Australian government can help pay for the cost of child care.

The previous Child Care Rebate and Child Care Benefit has been replaced with the Child Care Subsidy. Starting March 2022, the federal government made further changes to the CCS, meaning that eligible families with more than one child aged 5 or below will receive even more subsidy. So let’s have a look at the Child Care Subsidy in Australia and how it works.

Subsidy for Childcare
The Child Care Subsidy (CCS) helps Australian families with child care costs. As of March 2022, families with more than one child under the age of 5 now receive a higher subsidy.

What is the Child Care Subsidy?

The Child Care Subsidy (CCS) is a government subsidy focused on offering several levels of financial assistance to help cover the cost of child care fees for parents in Australia. In fact, CCS is the primary way through which the Australian government assists families to cover the cost of child care. Back in 2018, Child Care Subsidy replaced the Child Care Benefit and Child Care Rebate as a simpler, easier, and more affordable program for families.

How does the Subsidy for Childcare work?

A subsidy is a form of financial aid or support the government extends to an economic sector, a business or family, to keep the price of a commodity or service low. In this case, the Australian government subsidizes the costs of child care, i.e. service.

Since we’re talking about the subsidy, it’s paramount to remember the government does not pay the total costs of CCS, only a portion. The main objective here is to ease the financial burden on parents or caregivers. Considering it’s a subsidy to support paying for child care fees, the payments are made directly to the child care provider, not to an individual’s account. This is done to reduce your fees, leaving most families with some out-of-pocket costs by way of a gap payment, payable to the childcare service.

Who is eligible for Child Care Subsidy?

The subsidy for child care benefits many families across Australia, but to get access to this program, you need to meet certain requirements, specified by Services Australia. To be eligible for CCS, you or your partner need to meet the following criteria:

  • Meet the residency and immunisation requirements
  • Be liable for fees for care provided by an approved childcare provider
  • Care for a child at least two nights per fortnight or have 14% of care

Besides the above-mentioned requirements, you also need to ensure your child is not attending secondary school unless an exemption applies such as:

  • The child is 13 or younger
  • 14-18 years old with a disability

Keep in mind that if your child is attending secondary school, regardless of the exemption, you need to prove he/she needs supervision. For example, if your child has some form of disability, you also need to include evidence into the application for child care subsidy.

Make sure you keep in mind that the childcare provider needs to be an approved child care service. You can enquire with individual child care providers as to whether they are approved or not, therefore offering subsidised care.

What changes came into place in March 2022?

From March 2022, CCS was increased for families with more than one child aged 5 and under in child care. The second child aged under 5 will receive an additional 30% CCS and additional children will receive up to a maximum of 95% CCS.

Subsidy for Childcare
Make sure you check that the child care service is an APPROVED child care service for CCS

What residency requirements do I need to meet?

Meeting residency rules is one of the most crucial requirements for parents who want access to the child care subsidy. Residency requirements mean you or your partner need to have Australian citizenship or:

  • Permanent visa
  • A certain type of temporary visa such as a Temporary Protection visa or Partner Provisional visa
  • Special category visa

How is the Subsidy for Childcare calculated?

The “one size fits all” rule doesn’t apply here. There is no fixed amount of subsidy that works for all applicants, as it is a means tested subsidy. Several factors play a role in how much CCS you can receive, such as:

  • Combined family income – helps determine the percentage of CCS to which you are entitled.
  • Hours of activity performed by you and your partner – indicates how much a family contributes to the economy of Australia through both paid and unpaid activity. They take the parent with the lowest numbers per fortnight into account when calculating the activity. Activity refers to paid work, all types of work across jobs/employers, volunteering, work experience, authorized leave, unpaid work in a family business, looking for work, etc.
  • Hourly rate cap according to the type of approved child care

You can get an estimate here, but keep in mind the only way to learn about the specific amount of subsidy is to wait for the government’s feedback.

There are a couple of Child Care Subsidy Calculators available online which you can try using:

ChildCareSubsidyCalculator.com.au has their own calculator, but keep in mind they are NOT affiliated with Centrelink at all.

Care For Kids website also has a Child Care Subsidy Calculator which you can access here.

How does the Child Care Subsidy percentage work?

The CCS that a family receives will be paid directly to the child care provider and then passed on to the family as a cost reduction in their payable childcare fees. Families are required to pay the gap between the percentage that is covered and the total childcare fees that the provider charges. This means that if the Child Care Subsidy percentage the family receives is 48% of the total fee, then the actual fee charged will be the remainder gap fee of the other 62%.

This table comes straight from the Services Australia website and looks at family income and eligible CCS percentages

Is there an hourly rate cap? How does it work?

There is a maximum hourly rate that is subsidized for child care and this is based on the kind of service that is being run.

For a long day care centre, the hourly rate cap is currently $12.31 and for a family day care service, the cap is $11.40. Take a look at the table below for more information.

For a family, your Child Care Subsidy percentage will apply to either the hourly fee that you are charged by the childcare service or the hourly rate cap – whichever is lower. You can see the breakdown of hourly caps per the kind of child care service here: The type of child care you use can affect Child Care Subsidy – Child Care Subsidy – Services Australia

Subsidy for Childcare

Is there a Child Care Subsidy cap?

The annual cap for Child Care Subsidy was removed as of December 2021. There is currently no annual cap on the Child Care Subsidy for those receiving it, which is a welcome relief for many families who previously saw the CCS getting cut off towards the end of the financial year.

Is it possible to get 100% CCS?

Families that have an annual estimated income of between $0 and $70,015 will be eligible for 85% child care subsidy. As a family’s income increases, the child care subsidy percentage will decrease. Families who have multiple children (more than one child aged 5 years or under) attending child care are also eligible for a higher child care subsidy for their second child and younger children. In these circumstances, they will receive an extra 30% on top of their rate for eligible children and can receive up to 95% child care subsidy for the younger siblings. This makes child care more accessible for disadvantaged families, low or middle income families.

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Subsidy for Childcare
The out-of-pocket costs are much more affordable for many now, with a higher CCS allowance.

What if my child has absences? Does it affect CCS?

Each family is allowed up to 42 days of absence per child for each financial year. These absences can be for many reasons, including illness, emergencies or other personal family reasons. Some child care services require supporting documentation for absences and in some cases you can apply for additional absence days on top of the 42.

If a child’s enrolment at a service is cancelled, the child care subsidy will stop being paid. This can occur when a child has not attended child care for 14 days in a row, or when a child care service advises Centrelink that the child is no longer attending the service.

For the 2021/2022 financial year, families were given an extra 10 allowable absences, bringing the maximum to 52 allowable absences. For Jan and Feb 2022, families living outside WA were given unlimited absences. For those in WA, there were unlimited absences applied for the period 3rd March – 30th April 2022.

Does CCS affect your taxes?

Come tax time, your CCS will need to be balanced in line with your income. To avoid paying money back, it is important that you accurately estimate your family’s income. Here is some detailed information about balancing your child care subsidy: Balancing Child Care Subsidy – Child Care Subsidy – Services Australia.

Can you claim Child Care Subsidy at Vacation Care?

Yes, most vacation care services are approved services for CCS. Make your inquiries with individual vacation care providers.

Does Centrelink backpay CCS?

To receive CCS, a person must first submit a claim through Centrelink using an approved child care provider. If eligible, the subsidy will then be paid directly to the child care provider. In some circumstances, it might be possible to backdate a child care subsidy for up to 28 days and your child care provider should be able to help you with this.

There are times when new enrolments at a child care service and the corresponding CCS application can take longer than expected, due to hiccups with paperwork provided, confirming details through your myGov account or due to Centrelink error. In these cases, often yes, the CCS can be backdated from when the child first started attending, or from when the application for CCS was first made.

What are the immunisation requirements?

Immunisation requirements indicate your child needs to be vaccinated if you want to apply for CCS or even if you’re looking for Family Tax Benefit Part A. You will receive an Immunisation History Statement from the AIR (Australian Immunisation Register) once your child is ‘Up to date’ with their immunisations. You may be approved for Child Care Subsidy CCS if your child is on a suitable Immunisation catch-up schedule or if an approved medical exemption applies.

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Subsidy for Childcare
National Immunisation Schedule for all Australians

Upon applying, the information you provide is checked. For that reason, you’ll need to provide the child’s Medicare number and Individual Customer Reference Number (CRN). Parents whose children aren’t eligible for Medicare should inform the government once they complete their claim.

Meeting immunisation rules is also important if you want to retain subsidy. According to Services Australia, if the child stops meeting this requirement, the subsidy will stop unless you meet them again within 63 days. There are also many other benefits that come from meeting Immunisation requirements.

Subsidy for Childcare
Your child will need to meet the Immunisation requirement to be eligible for the CCS

How to claim subsidy for childcare?

Before you even start the process to claim childcare subsidy, you need to go through eligibility criteria; the Child Care Subsidy Assessment. Upon confirming you, your partner and your children meet all the requirements; you can begin with your claim. Today you can do pretty much everything online. You’ll need a myGov account linked with Centrelink (sign in or sign up). Make sure you have all documents you need for the CCS claim. When you have everything ready for your claim, log in to your myGov account and Centrelink, go to Payments and Claims in the menu, head to Claims, click the Make a Claim, and proceed to Families. Answer the questions, complete your claim, and submit. On the same platform, you can track the status of your claim.

When your child starts care in an approved child care service, the service will ask for your CRN’s (Customer Reference Numbers for parent AND child) from Centrelink and enter these numbers, along with your enrolment information into their CCMS (Child Care Management System) Software. Once your child starts attending, the child care provider will send you a statement for the gap, usually with CCS applied to your account already, assuming you have applied, it is approved and processed by Centrelink.

What is Additional Child Care Subsidy (ACCS)?

Some families can receive additional help, actually. Extra support comes in the form of an Additional Child Care Subsidy (ACCS) to which you can apply if you’re experiencing temporary financial hardship, transitioning to work, or if you’re a grandparent.

Summary of Subsidy for Childcare

The Australian Child Care Subsidy CCS helps reduce the financial burden for families who need to pay for child care. The new CCS program was implemented in 2018, and it’s simpler and more convenient than its predecessors.

The changes made to the CCS in March 2022 mean families with more than one child under 5 will have more money in their pocket, making child care fees more manageable. However, you need to meet certain criteria to be eligible. The amount of subsidy depends on several factors that determine how much parents participate in the economy of Australia but also their financial status to understand how much help they need.

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