Understanding the Child Care Subsidy Changes

From July 10 2023, the Child Care subsidy is changing to make high quality early education and care more affordable for more families.

Under the new changes, the maximum amount of Child Care Subsidy (CCS) will increase from 85% to 90%, and families earning $80,000 or less will receive a CCS rate of 90%. Families earning over $80,000 will receive a CCS rate that decreases by 1% for each $5,000 of family income, and this rate reaches 0% for families earning $530,000 or more. The new changes are expected to reduce childcare costs for families and increase access to childcare for those who need it.

Additionally, the new subsidy will increase the amount of childcare subsidy that families receive, and all families will have their childcare subsidy rate increased unless their total income is $530,000 or more. The changes will see families earning up to $80,000 refunded 90% of their first child’s fees. The new subsidy is designed to make childcare more affordable and accessible for families, particularly those who are working or studying.

Families with more than one child aged 5 or under in care can get a higher subsidy for their second child and younger children.  

They currently get an extra 30% on top of their income tested rate for eligible children, up to a maximum of 95%. 

In Home Care (IHC) sessions do not attract the higher subsidy. This is because IHC is subsidised per family, rather than per child. 

What is the Childcare Subsidy?

The childcare subsidy is a government program designed to help families with the cost of childcare. The subsidy is means-tested, which means that the amount of subsidy a family receives will depend on their income.

The subsidy is paid directly to the childcare provider, which will reduce the out-of-pocket expenses for families. The amount of subsidy a family receives will depend on the following factors:

• The family’s income
• The hours of activity (work, study, training, or volunteering) of both parents
• The type of childcare service used (long day care, family day care, outside school hours care, etc.)
• The age of the child

Eligibility

To be eligible for the childcare subsidy, families must meet certain criteria. These include:

• The child must be aged 13 or under and not attending secondary school
• Both parents must be working, studying, training, or volunteering for a minimum of 8 hours per fortnight. In the case of single parents, they must meet this requirement
• The family must meet the residency requirements
• The child must be immunized or have an approved exemption

How to Apply

Families who are eligible for the childcare subsidy will need to apply through the myGov website. They will need to provide information about their income, activity levels, and the type of childcare service they use. Once the application has been processed, families will receive a notification of their eligibility and the amount of subsidy they will receive.

Benefits of the Childcare Subsidy

• The childcare subsidy has several benefits for families, including:
• Reduced out-of-pocket expenses for childcare
• Increased access to childcare for families who are working or studying
• Increased affordability of childcare for low-income families
• Greater flexibility in terms of the type of childcare service used

Overall, the changes to Australia’s childcare subsidy are expected to have a positive impact on families, making childcare more affordable and accessible for those who need it.

This article is an opinion piece only and does not constitute tax, legal or any other form of advice.