What is the Child Care Subsidy?
What is the Child Care Subsidy?
The Child Care Subsidy (CCS) is the main government payment available to support families with the cost of child care.
The CCS replaced the Child Care Benefit and Child Care Rebate in 2018. In most cases CCS is paid directly to early childhood providers and passed on to families as a reduction in fees.
Typically, families pay their provider the difference between the fee charged and the subsidy amount (this is often referred to as "the gap").
How much child care subsidy will my family receive?
Under the Child Care Subsidy the amount of financial support a family receives will depend on three factors:
- Combined family income
- How much work/activity the parents do
- The type of care a family chooses to use
1. Combined family income
As briefly mentioned above the CCS is means tested, which means how much your family earns affects how much subsidy you will receive. The government says the goal is to offer more support to lower income families.
The table below summarises the amount of subsidy available to families at various income levels which take effect as of 13th July 2020.
|Combined family income per year||Subsidy per cent (of the actual fee charged or relevant hourly rate cap whichever is lower)|
|Up to $69,390||85 per cent of fees|
|$69,390 to below $174,390||Decreasing to 50 per cent of fees*|
|$174,390 to below $253,680||50 per cent of fees|
|$253,680 to below $343,680||Decreasing to 20 per cent of fees*|
|$343,680 to below $353,680||20 per cent of fees|
|Equal to or above $353,680||No subsidy applies|
* The subsidy gradually decreases by 1 per cent for each additional $3,000 of family income
This table was updated on 10 June 2020
2. How much work/activity the parents do
The CCS encourages parents to return to work, by reducing the cost of care for people in employment.
This means the more work or approved activity a person undertakes. the more subsidised care they are entitled to, up to a maximum of 100 hours per fortnight. This is called an activity test.
In families with two parents, both parents (unless an exemption applies) must meet the activity test and the parent with the lowest hours of work or approved activity will determine how much subsidised care the family is entitled to.
|Step||Hours of activity per fortnight||Maximum number of hours of subsidy per child per fortnight|
|1||8 - 16 hours||36 hours|
|2||16 - 48 hours||72 hours|
|3||More than 48 hours||100 hours|
To meet the activity test parents can be involved in a wide range of paid and unpaid activities including:
- Paid work, including leave
- Unpaid work for the family business
- Training for the purpose of up-skilling or improving employment prospects
- Study or tertiary education
- Active job seeking
- Paid parental leave including maternity leave
In addition, activities can be combined to determine the maximum hours of subsidy so a parent could be working and studying part time and volunteering on the weekends and the total number of hours across all those activities would be used to work out how much subsidy will be paid.
Travel time can also be included and it’s important to note that the activity hours do not need to coincide with when the child is in an early childhood service.
Exemption from the activity test
In some instances, the activity test may not apply, which means parents do not need to be working the requisite number of hours to receive the subsidy. This is the case for families earning $66,958 ( reference Dept of Education Child Care Safety Net) or less, who can access 24 hours of subsidised care per child per fortnight.
3. The type of care a family chooses to use
Under the CCS the type of child care your family uses is the third factor which affects the amount you receive. Centre based long day care attracts the highest subsidy, family day care comes next and outside school hours attracts the lowest subsidy.
The maximum hourly subsidies are summarised in the table below:
|Type of child care service||Maximum hourly rate cap|
|Centre based care (long day care and occasional care)||$12.20 or $10.67 for school aged children|
|Family day care||$11.30|
|Outside school hours care (before, after and vacation care)||$12.20 or $10.67 for school aged children|
|In Home Care (per family)||$33.17|
It’s important to note child care providers charge their own fees and the rates above reflect the maximum subsidy amount, not the fees that will be charged. These caps are the maximum provided under the Child Care Subsidy and are used in combination with family income and activity levels to determine exactly how much subsidy a family receives.
In situations where a child care provider charges less than the maximum hourly cap set by the government, families receive the subsidy as the applicable percentage of the fee charged, and when a service charges more than the hourly cap, families have to pay the gap between what the subsidy covers and what the provider charges.
We have developed a Child Care Subsidy Calculator, which you can use to estimate the level of subsidy your family may be entitled to receive.
You can access the CareforKids.com.au Child Care Subsidy Calculator here.
What is the Child Care Safety Net?
The Child Care Safety Net aims to make it easier for vulnerable children to access high quality early education and care in the years before school and offers additional support to targeted groups.
The Child Care Safety Net is comprised of three components:
- The Additional Child Care Subsidy
- The Community Child Care Fund
- The Inclusion Support Program
1. The Additional Child Care Subsidy
This payment offers extra support to children at risk of serious harm or neglect; grandparent principal carers on income support and families experiencing temporary financial hardship, in the form of a top up payment equal to 100 per cent of the actual fee charged (up to 120 per cent of the hourly rate cap) for up to 100 hours per week.
Parents returning to the workforce after being on income support are also eligible, and will receive a subsidy equal to 95 per cent of the fee charged by the child care provider for hours determined by the activity test.
2. The Community Child Care Fund
While this fund is not payable to families it aims to benefit families by improving access to high quality early childhood education and care services.
Under the fund, eligible child care services can apply for additional funding to reduce the barriers to accessing care, particularly for disadvantaged families and communities.
It can also be used to increase the number of child care places in areas where vacancies are scarce and to prop up services facing viability issues.
3. The Inclusion Support Program
This initiative commenced in July 2016 and offers funding to child care providers to make it easier for them to include children with additional needs within a mainstream program.
The program supports providers by improving their capability and capacity to offer education and care for children with additional needs and offers these children an opportunity to play and learn alongside peers developing along the usual trajectory.
This child care article was last reviewed or updated on Thursday, 01 October 2020
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