Changes to Child Care Rebates – What You Need to Know Before July

Do you have one or more children in child care?  The weekly costs can certainly add up can’t they.  Plus it can be really confusing to understand what you’re actually entitled to when it comes to the two subsidies currently available, these being Child Care Benefit (CCB) and the Child Care Rebate (CCR).

Well, even if you have got your head around the way they are currently, it was recently announced that the current subsidies will be changing as of July 2nd 2018.  And, in news just announced, the changes are not going to happen automatically.  We’ve got more information about what you need to do at the end of this post.


What Part of the Child Care Subsidy is Changing?

Instead of the the Child Care Benefit and the Child Care Rebate, eligible families will now receive the Child Care Subsidy.  Sounds easy, right?

Are the Changes Positive?

Well Government figures say almost 816,000 families will be better off when these changes come into effect in July.  On average, those earning between $65,710 to $170,710 will be $1500 a year better off.

But about 128,000 families will get reduced subsidies, including 52,100 earning less than $65,710 a year (mainly because they don’t work enough to be eligible).

Families earning below  $65,000 a year can still have 85 per percent of their child care bills paid for but, they will need to work,  study or volunteer for at least eight hours a fortnight to get the maximum benefit.

So let’s get the facts about the changes and how they will affect you and your family.

Changes to the Child Care Rebates come into effect on 2nd July 2018 - do you know what the changes mean for your family?

What do the Changes Mean?

One of the biggest changes for families will be that the new subsidy will be paid directly to service providers and passed onto families as a fee reduction, as opposed to the current system where parents receive a rebate, but have to actually cough up the fees upfront first.

It is meant to be simpler than the current multi payment system.

Sounds pretty simple, right?  Well hold onto your hats, there’s more!

Child Care Subsidy – Activity Test

The activity test will help determine how many hours of childcare per fortnight you will receive a subsidy for. In in order to receive any subsidy at all, both parents are required to work, study or volunteer for a minimum of 8 hours a fortnight.

  • Families working 8 – 16 hours per fortnight are eligible to receive 36 hours per fortnight of subsidised care
  • Families working 16 – 48 hours per fortnight are eligible to receive 72 hours per fortnight of subsidised care
  • Families working more than 48 hours per fortnight are eligible to receive 100 hours per fortnight of subsidised care

Child Care Changes – Level of Subsidy

There will also be a new system to determine what % of fees you are eligible to receive, based on your annual income.  We’ve put together a quick summary below, but to find out exactly how much you are eligible for, you can find the Family Child Care Subsidy Estimator here.

  • Families on $65,710 or less will receive a payment equivalent to 85% of their fees
  • Families on $65,710 – $170,710 will receive a payment that is tapered down from 85% to 50%, receiving 1% less for every $3000
  • Families on $170,710 – $250,000 will receive a payment equivalent to 50% of their fees
  • Families on $250,000 – $340,000 will receive a payment that is tapered down from 50% to 20%, receiving 1% less for every $3000
  • Families on $340,000 – $350,000 will receive a payment equivalent to 20% of their fees.
  • Families earning more than $350,000 will receive no subsidy

Hourly Cap

Ok, so this is where it gets a little more confusing.  When the subsidy commences in July 2018, the hourly rate caps will be:

Service Type Maximum hourly rate cap
Centre Based Day Care (Long Day Care and Occasional Care) $11.55
Family Day Care $10.70
Outside School Hours Care (Before, After, and Vacation care) $10.10
In Home Care $25.00 (per family)

These caps place an upper limit on the amount of Child Care Subsidy the Australian Government will provide, rather than the Government actually setting child care fees.  Services will still charge what they want to and parents will have to pay the gap between the subsidy and the actual fee.

The rate cap will be used, in combination with your family income and level of activity to calculate the amount of subsidy you’re entitled to.

Where a child care service charges less than the hourly cap, you will receive the applicable percentage of the actual fee charged. If your child care service charges more than the cap, then you will receive the applicable percentage of the hourly rate cap.

Is your head spinning yet?  Because mine is!

Additional Child Care Subsidy

In addition to the regular subsidy, the Additional Child Care Subsidy will be accessible to families who need it most.  These include families who have children at risk of abuse or neglect, those experiencing temporary financial hardship and some grandparents who care for their grandchildren for more than 65% of the time.

The Additional Child Care Subsidy allows eligible families to claim 100% of the actual fee charged (up to a max of 120% of the hourly fee cap) with up to 100 hours a fortnight.  You can find out more information about the Additional Child Care Subsidy here.

Will You Be Affected By the Changes?

If you’ve got one or more children in child care, then chances are you will be affected by these changes.  If you’re having trouble understanding what it all means, then have a chat your child care provider.  Chances are they will have a good understanding of it all and be able to explain how it will affect you.

You can use the estimator found here to check how it will look for you come July.

You’ll also find all the FAQ around this topic here

What Do You Need To Do Before 2nd July?

In news just announced, you are required to complete a Child Care Subsidy Assessment BEFORE 2nd July 2018 – otherwise you may not be eligible for assistance.  Throughout April, you will be contacted via your My Gov account and asked to complete an online Childcare Subsidy assessment using your Centerlink online account.  Make sure that you contact Centrelink if you are not contacted automatically.  For information on this, you can go here.

 

About the Author

Kate is the founder of South West Mums, coffee connoisseur, FIFO Wife and Mumma to two boys.  She loves to explore and write about life in South West WA, motherhood, business and the effects of FIFO on family life.  You can connect with her on Instagram and Facebook or read more of her blog here.

 

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