What you need to know about the new government child care subsidy

This article is originally published in Circle In.

As we gear up for the Australian Government’s New Child Care Package rollout, it’s important to know what is changing, how it affects your family and what you need to do. From 2 July 2018 the current Child Care Rebate and Child Care Benefit will be replaced by a single payment, the new Child Care SubsidySo, ‘how much Child Care Subsidy can my family access?’ we hear you ask.

There are three things that will determine what you will receive:

  1. Your combined family income

Your family’s annual adjusted taxable income will determine the percentage of subsidy you are eligible for. To calculate how much subsidy you might receive, use this helpful online estimator.

For families with a combined annual income of $186,958 or less, there is no annual subsidy cap. Families earning above that but below $351,248 will be capped at $10,190 per child, per year. Over the combined annual income of $351,248, families will not be eligible for the subsidy.

Your combined family income and the subsidy you will receive:

combined-annual-income-updated-585x329

2. How much you work, study or volunteer

The number of hours of subsidised care your family can access increases relative to the hours of activity undertaken by parents (up to 100 hours of subsidised care per fortnight). To meet activity test requirements, parents must carry out at least eight hours of recognised activity per fortnight. Paid work (including leave such as maternity leave), self-employment, unpaid work in a family business, study or training, volunteering and looking for work are all recognised activities within the test. Other activities may also be included on a case-by-case basis.

If you legitimately cannot meet the activity test requirements, there are exemptions that are worth looking into. Also, the Package includes a Safety Net to offer much-needed support to vulnerable or disadvantaged families, and to grandparents who are primary carers.

3. The type of childcare service your family uses

Under the new system, annual subsidy caps per child have either been abolished or raised for the majority of families. However, there is now an hourly rate cap on the subsidy you can receive, which is determined by the type of child care service you use: centre-based care, family day care, outside school hours care or in-home care.

What you need to do now

It’s important to know that the transition to the new Child Care Subsidy is not an automatic rollover and if you do not complete your assessment before 2 July 2018, you may not receive any child care fee assistance. You can do this online now through your myGov account.

For more information including detailed explanations of subsidy rates and caps, activity test requirements, FAQs and information for families with unique circumstances, visit education.gov.au/ChildCarePackage.

For financial tips for parents returning to work after having a baby from the Minister for Education and Training, Simon Birmingham, read Planning your family finances and returning to work.

 

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