The Australian Government’s new Child Care Package begins today – July 2, 2018. All families who use child care will be affected — but just what will the changes mean for you and your family?
The Australian Government’s Child Care Package
- There is now just one payment – the Child Care Subsidy. It replaces the Child Care Benefit and Child Care Rebate.
- The Child Care Subsidy is paid directly to the service provider.
- The Child Care Subsidy is means tested.
- Families must meet an ‘activity test’ to be eligible for the Child Care Subsidy.
- Families earning $66,958* or less a year can access up to 24 hours of care a fortnight without having to meet the ‘activity test’.
- There is no annual rebate cap for families earning less than $186,958* a year. There’s an annual cap of $10,190 per child for families earning more than this (but less than $351,248).
The Child Care Subsidy – eligibility and level of subsidy
There are some basic criteria for families to meet in order to be eligible for the Child Care Subsidy. These are:
- the child must be aged 13 or under (and not attending secondary school).
- the child must meet immunisation requirements.
- the individual or partner making the claim must meet residency requirements.
Also, the individual making the claim must be responsible for paying child care costs, the care must be delivered by an approved provider in Australia and it must not be part of compulsory education (which means you can’t claim for the cost of a child attending school).
A family’s level of subsidy is determined by three things:
- combined family income.
- an activity test.
- the type of service being accessed.
The Combined Family Income
The Combined Family Income is how the government determines how much of your child care costs it will cover. The lower the family income, the higher the percentage they will cover.
For example, a family earning up to $66,958* a year will have 85 per cent of their fees covered by the Child Care Subsidy. This rate gradually reduces to 0 per cent for families who earn more than $351,248 a year.
The Activity Test
To receive the Child Care Subsidy families must meet an activity test. The number of subsided hours you’re able to access will depend on the number of hours you work each fortnight.
Both parents must meet the activity test – and in circumstances where one parent works less than the other, the subsidy will be based on the parent who works the least.
A parent working between 8-16 hours a fortnight can access 36 hours of subsidised care. A parent working more than 16 – 48 hours can access 72 hours and a parent working more than 48 hours can access 100 hours of subsidised care.
There are a number of ways to meet the activity test including paid work, running a business, unpaid work in a family business, an approved course of study or education, training courses, volunteering, actively looking for work, on Paid Parental Leave or maternity leave.
Families earning $66,958* or less a year can access up to 24 hours of care a fortnight without having to meet the ‘activity test’.
Hours of care do not have to co-incide with actual hours of work — for example, you can work on the weekend and access child care through the week.
The type of service being accessed
While there is no longer an annual cap – there is now a cap on the hourly rate that the government will subsidise. The cap is different depending on the service.
- For centre-based day care (long day care and occasional care) the cap is $11.77* an hour.
- For Family Day Care the cap is $10.90* an hour.
- For Outside School Hours care (before, after and vacation care) the cap is $10.29* an hour.
* the amounts quoted in this article are correct as of July 2018
This article is intended as a general guide to the Australian Government’s new Child Care Package. To check your eligibility based on your own circumstances visit the Department of Education and Training website.