Child Care Subsidy
Your combined family income is one of three key factors that determine how much Child Care Subsidy you will receive from 2 July 2018. Generally, as family income increases, the amount of Government subsidy decreases.
The other two factors determining your Child Care Subsidy is your fortnightly activity – such as work, study or volunteering, and the type of service your child attends.
Positive changes to the annual subsidy cap
One of the benefits of the Child Care Subsidy is the removal of the annual cap for low and middle-income families.
If your total combined family income is $186,958 pa or less, the annual subsidy cap has been removed.
If your family earns more than this (between $186,958 and $351,248 pa), the cap will be increased to $10,190 per child per year (the current rebate cap is $7,613).
This is great news for families who hit this cap well before the financial year is out and find themselves paying full fees or reducing their number of days of care until the annual cap resets. It will also remove the barrier for families wanting to work extra shifts, or increase the days their child attends care.
How do I calculate and report my income?
If you are currently receiving Child Care Benefit and/or Child Care Rebate, you will need to complete a Child Care Subsidy assessment and apply for the subsidy via myGov. During this process, families will be asked to provide their estimated 2018-19 combined family income and their activity details.
If you don’t already have one, register now for a myGov account as this is how the government will communicate what you need to do to transition to the new subsidy system.
Your subsidy percentage will be based on your estimated combined annual family income. Your actual subsidy entitlement will be worked out at end of year reconciliation when your actual adjusted taxable income is known (after you have lodged your tax return).
The easiest way to estimate your income is to base it on your previous year’s tax return as well as any expected pay rises.
Note that 5% of your weekly Child Care Subsidy entitlement will be withheld by the government. Following reconciliation of your tax return at the end of the financial year, any amount owing to you will be paid as a lump sum by the government. If you have been paid too much Child Care Subsidy, you will have a debt to repay.