There are some important changes to the way parents will pay for childcare from 2 July 2018. The current Child Care Benefit and Child Care Rebate will cease and will be replaced by the Child Care Subsidy.
Three factors will determine the subsidy amount for each family – combined family income, how much the parents work (based on the parent who works the least) and the type of childcare used.
So, here’s the facts:
1. There will no longer be an annual cap to the Child Care Rebate, which is currently $7,613 per year, per client.
2. There will now be an hourly cap on the subsidy. For centre-based child care the subsidy is $11.55, $10.70 for family day care and $10.10 for out-of-school-hours care.
3. Unlike the rebate, payments will be made directly to the childcare providers so they reduce their fees accordingly, instead of you paying upfront and receiving a fortnightly payment.
4. To be eligible, both parents must meet the activity test.
5. Many families will be better off as a result of this change – almost 816,000 families, according to the Government.
6. Around 128,000 families will be worse off, including 52,100 families who earn less than $65,710 per annum. This is a mainly because they do not work enough to be eligible. Having said that, those that do have incomes of $65,710 or less and the parent who works the least engages in volunteering, study or another activity for more than eight hours per fortnight, they may end up better off.
7. Providing they meet the activity test, for families with an annual income of $65,710, 85 per cent of fees will be covered. This gradually decreases to 50 per cent for those earning more than $65,710, upto $170,710.
8. The subsidy stays at 50 per cent between $170,710 and $250,000 and then decreases to 20 per cent at $340,000.
9. Those who earn over $350,000 per year, will no longer receive a rebate.
10. Those earning over $180,710 annually can claim a maximum of $10,000 per child.
For more information visit www.education.gov.au where you can read more about the changes and use the estimator to see what your potential subsidy will amount to.