Packing lunches, changing their clothes, coordinating the pick-up and the drop-off, weighing up the cost of childcare and the rewards of going back to work – it can be tough enough simply being a parent, let alone deciphering childcare funding reform. The good news is we’ve done all that for you, so that you and your family can prepare.
From 2 July 2018, Commonwealth support for childcare costs will be delivered via a single, means-tested subsidy.
Under the current system, the Child Care Benefit (means-tested) is usually paid directly to the approved childcare service provider. The Child Care Rebate (not means-tested) is either paid to the family’s bank account, or through childcare service providers as a fee reduction,” she says.
From July 2 all of the subsidy will be going to the childcare centre and the family is just going to have to pay the gap fee.
Impact on different families
Low to middle-income families with two working parents will benefit most from the changes.
Average assistance for low-income working families (those earning up to $65,710 combined), who meet the activity test, will rise from 74% to 85% of the fee.
Wealthy families earning more than $350,000 are set to see the largest decrease. Under the old scheme they received up to $7,500 in annual rebates per child. Soon they’ll receive none.
Here’s a breakdown of the thresholds:
|Combined Family Income||Subsidy % of the actual fee charged (below the hourly fee cap)|
|Up to $65,710||85%|
|> $65,710 to < $170,710||Tapering to 50%|
|$170,710 < $250,000||50%|
|$250,000 < $340,000||Tapering to 20%|
|$340,000 < $350,000||20%|
For families earning more than $180,710, an annual subsidy cap of $10,000 per child will apply.
Estimate the impact on your family
To get a picture of exactly what these changes will mean for your family, and to model different scenarios, head to the Australian government’s Family Child Care Subsidy Estimator.
It generates a subsidy estimate after considering:
- family income
- hours of eligible activities (working, training, studying or volunteering) per fortnight
- number of children in care
- care type (centre-based, family day care, or outside school hours care)
- hours in care
- associated session or hourly fees
Once you know what kind of the subsidy you can expect, work out what your new gap fee might be – will you be paying more or less out-of-pocket?
If you fall within one of the higher income brackets it may be particularly important to start considering the impact on cashflow.
Your budget will need to be looked at closely and altered to include the gap-fee you’ll be paying under the new subsidy.
If you haven’t already it is now time to take action to ensure that if you are entitled to the subsidy you will begin receiving it from July 2.
- Log into www.my.gov.au
- Access your centrelink profile
- Complete your assessment online (this will include information about your income, hours of work/study/ voluntary activity and the hours of childcare you have your children enrolled in).
You will then be assessed for the subsidy and advised by centrelink of your entitlements.
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