How will the new child care package affect your family?

Families have just a few weeks before a new child care subsidy kicks in. Find out if your family will be better or worse off after the goalposts shift.

Australian parents are charged some of the highest fees in the world for child care. In fact, for the average Aussie family that needs child care, almost one-sixth of their income goes towards it.

From July 2, a new system comes into effect. It will leave some household budgets better off, others worse

But, before we get stuck into the nitty gritty details, it’s important to know that your old information will not automatically rollover to the new system.

That means you may not receive any subsidy if your assessment is not completed here. So get onto it pronto.

So, what exactly is changing?

The most significant change in the federal government’s new child care package is that the current Child Care Benefit and Child Care Rebate will be replaced with a single, means-tested benefit: The Child Care Subsidy, which will be paid directly to services.

Families that complete more than 48 hours of activity each fortnight can earn the maximum 100 hours of subsidised care per fortnight. But just 16 hours’ activity will qualify them for 72 hours care.

Recognised ‘activities’ include paid work (including leave), study and training, and unpaid work in family business. It also includes looking for work, volunteering, self-employment, and other activities on a case-by-case basis.

How your family will fare:

Combined family income Fee subsidy* Annual subsidy cap per child
Up to $66,958 85% No cap on the amount of Child Care Subsidy they can claim
Between $66,958 and $171,958 Tapering from 85% to 50% No cap
Between $171,958 and $251,248 50% No cap for families earning up to $186,958. A $10,910 cap for over
Between $251,248 and $341,248 Tapering from 50% to 20% $10,910 cap
Between $341,248 and $351,248 20% $10,910 cap
$351,248 or more 0%  No subsidy

* as a percentage of the actual fee charged, below the hourly fee caps of:

  • $11.77 per hour for centre based day care
  • $10.90 per hour for family day care
  • $10.29 per hour for outside school hours care
  • $25.48 per hour (per family) for in home care

Impact on your bottom line

Because of the new focus on means testing, under the new scheme wealthier families will receive less money.

So, if your family earns more than $351,248, where on the former scheme you could have received up to $7,500 per child, you’ll soon receiving nothing.

It’s also likely that families earning over $251,248 will receive less per child.

If your family earns less than this, then the amount you may gain (or lose) will depend on your specific household income, the price of the child care you’re using, and whether you’ll be able to meet the activity test requirements.

To help you calculate how much you’ll receive under the new scheme, the government has launched a user-friendly Child Care Subsidy Estimator.

The estimator takes about 15 minutes to fill out. It will help your family understand your new entitlements, which in turn will allow you to plan accordingly.

And remember, it’s important to update your details and successfully make the transition onto the new scheme here.

What else?

If you’re still not sure how your family will be affected, or if you’re worried that you might be at a disadvantage under the new scheme, come and have a chat with us.

We can help you look at your current and future benefits, and step you through any necessary planning to make sure you’re ready to go when the changes come into play on July 2.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

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