The Childcare Subsidy: What you need to know

In July the Australian Government will implement major changes to the ways in which childcare is subsidised in Australia. The government is introducing the Childcare Subsidy, a new means tested subsidy, which will replace the current Childcare Benefit and Childcare Rebate schemes.

The Childcare Subsidy will be a single payment paid directly to childcare service providers to pass onto families. The reviewed subsidy scheme aims to provide more assistance to low and middle income families and also directly target the children who have previously fallen through the cracks when it comes to early childhood education.

What am I entitled too?

All children can receive up to 100 hours of subsidy per fortnight under the new scheme. Families that have a combined annual income of less than $66,958 will have 85% of their childcare fee subsidised. As families’ combined income increases, their subsidy decreases in increments, so those with a combined income of over $351,248 will not receive any subsidy.

What’s more for families with a combined income of $186,958 or less, there will now be no annual subsidy cap per child.

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It isn’t just parents involved in paid work who will have access to the subsidy scheme. Those parents who are self-employed, involved in unpaid work in a family business, looking for work, volunteering or studying will also have access to the Childcare subsidy, provided that the parent or guardian with the lowest hours of activity works up to 8 hours per fortnight.  

To see how much you will be entitled to under the new scheme you can access this subsidy estimator: https://www.education.gov.au/sites/education/files/chcare/est/index.html

Things to note:

1.     You can only access this Childcare subsidy scheme through registered childcare organisations; therefore if you put your child primarily in the care of family and friends, for example grandparents, you will not have access to the childcare subsidy.

2.     There will be a three-step activity test, which both parents must meet, in order to be able to access the childcare subsidy, parents must demonstrate…

i) What activity they are engaged in

ii) How many hours per week they are engaged in that activity

iii) Combined household income

3.     Your information does not automatically roll over into the new system, so you need to ensure that you complete the appropriate forms through the MyGov website in order to access this new subsidy program.

Sophia Kimmins