A new Child Care Subsidy program will roll out all across Australia on 2 July 2018.
A widespread information campaign has been launched through the Department of Education and Training to ensure that all families become knowledgeable about their benefits and entitlements, and what they should do to ensure a smooth transition from the old program.
To begin with, there are three key steps that everyone must complete as soon as possible:
- Sign in to your myGov account. You must create an account if you do not have one.
- Link your myGov account to Centrelink. You can do this under Services.
- From myGov, select Centrelink and complete your Child Care subsidy assessment. Confirm your current details and provide any new information needed.
Actually, the new Child Care Subsidy is a simpler, means-tested subsidy that considers three factors to screen for eligibility.
- Combined Family Income
- Activity level of both parents, as determined by an Activity Test
- Type of Child Care Service being availed
Here are some additional facts relating to the new Child Care Subsidy that you may not know about.
Fact #1
Instead of the flat 50% rebate on fees that the old program provides, the new subsidy will be given based on a sliding scale. The subsidy gradually decreases as income gets higher, tapering down by 1% for each $3,000 increment of combined family income.
For purposes of computing subsidy, “combined family income” is the adjusted taxable income of either an individual or a couple (depending on the claimant/s). A reasonable estimate of combined family income is one of the data that each family should provide when they register for the subsidy online.
For instance, residents of the affluent 4007 postcode, covering Hamilton, Hamilton Central and Ascot, where the median house price currently sits at around $1.3-M and the annual taxable income comfortably tops $100,000 per year, can expect to get a lower subsidy, tapering down to no subsidy, depending on their family’s level of combined income.
Here is the tabulated schedule of benefits, effective from July 2018. The lowest income threshold will be indexed by the Consumer Price Index (CPI) annually.
You can get an estimate of what your family may be entitled to by entering your details into the Payment and Service Finder of the Department of Human Services.
Fact #2
Depending on the recognised activities undertaken by the parent/s, as determined by the Activity Level Test, a family can receive up to a maximum of 100 hours of subsidy per fortnight per child.
Did you also know that for couples, the total subsidised hours will be based on whichever of the two has the lowest activity test result, even when an exemption applies.
Fact #3
The type of child care you need also affects your subsidy.
It all depends on how much your child care centre charges per hour. Subsidies are calculated based on a set hourly rate cap.
Hourly rate caps reflect the maximum amount that the Australian Government will subsidise on approved child care. The caps vary across service types to mirror variations in operating costs and average fees charged by the providers.
Simply put, the child care providers set their fees (not the government) and parents pay the gap between the subsidy they receive and the actual fee charged by their provider.
Subsidies are paid by the government directly to the provider. To find out how much subsidy has been paid out to your account, you can check your myGov account for the details.
Your child care provider will give you a fortnightly statement showing the subsidy they have received as payment for your account, the total charges for care you have received, and the balance you still need to pay, if any.`
Fact #4
The subsidy that will be paid to the provider in the form of fee reductions will be 5% less than an individual’s Child Care Subsidy entitlement.
According to the Child Care Provider Handbook from the Department of Education and Training:
“Withholding some of a family’s entitlement to Child Care Subsidy before it is paid to child care providers is a way to reduce the likelihood of families incurring a debt at the end of a financial year.
The process of withholding does not reduce a family’s overall entitlement to Child Care Subsidy and is similar to the process of withholding some of a family’s Child Care Rebate if they also received any Child Care Benefit under the previous child care arrangements. Some parents may have their withholding percentage varied from the default amount of five per cent.
Providers will be able to see the amount withheld on the payment advice they receive each fortnight.”
Additional Child Care Subsidy payments will not be subject to any withholding. For more information about withholding, see Withholding of payments.
Fact #5
No shots, no subsidy.
To be eligible for subsidy, children must be immunised in accordance with the vaccination schedule of the National Immunisation Program. If their vaccinations aren’t up-to-date, they must be on a recognised and recorded catch-up schedule.
Check on your children’s immunisation needs here. Only children who have been immunised or those who have a valid exemption duly recorded on the health register will be entitled to the Child Care Subsidy.
Fact #6
Grandparent principal carers may be eligible for Child Care Subsidy.
Those who are on income support will be supported through the Additional Child Care Subsidy (grandparent).
Those who are not on income support will be entitled to 100 hours of subsidised child care per fortnight, regardless of their activity level. The rate of subsidy will based on their (and/or any partner’s) income.
Those who have regular or shared care of the child, even if they are not the principal carers for the child, may be eligible for subsidy as well. This will be based on their income and hours of recognised activity.
Grandparents who earn less than $66,958 and do not meet the Child Care Subsidy activity test will still be able to access 24 hours of subsidised care per fortnight at 85% of the hourly rate cap.
Fact #7
For some families, care outside the home is a option that’s not available or appropriate.
The new Child Care Subsidy also provides for a subsidy for In-Home Care. The criteria to qualify for In-Home Care, its benefits and other details are outlined here.
The existing Nanny Pilot Programme will run until 30 June 2018 only. The program, which currently provides financial support to eligible families for the cost of using a nanny, will be discontinued. Further information is available on the new In Home Care program which will replace the existing Nanny Pilot Programme.
Fact # 8
Child care under the Child Care Subsidy program must not be part of a compulsory education program and must be delivered by an approved child care provider in Australia.
Here are details about the special conditions and exemptions, relating to Family Day Care and In Home Care.
Fact # 9
Here is a downloadable document containing the Family Transition Timeline and the steps that a family needs to follow between now and 1 July 2018 in order to successfully transition to the new program.
Fact # 10
There is a Child Care Safety Net for children who are deemed to be in disadvantaged circumstances, such as those in families who are experiencing temporary financial hardship, those whose parents are transitioning back to work, and those whose well-being are deemed at risk of neglect or abuse, will be granted additional subsidy.
Families with children who are under the care of grandparents who are on welfare are also eligible for the subsidy.
Low-income families who do not meet the Activity Test threshold but earn $66,958 or less a year will still be able to access 24 hours of subsided care per fortnight through the Child Care Safety Net.
