An individual (or their partner) who is entitled to receive Child Care Subsidy is required to pay a co-contribution to the cost of child care. The subsidy entitlement is always a percentage of the actual fees for care provided, and the provider is obliged to both:
- pass on the Child Care Subsidy amounts paid, generally as a fee reduction, and
- ensure that the individual pays their co-contribution - the gap between the Child Care Subsidy paid and the actual fees charged.
This usually means the provider will invoice families for the fees that are incurred over and above the subsidy - that is, the agreed child care fees minus fee reduction amounts (the Child Care Subsidy and Additional Child Care Subsidy payments it receives on the family's behalf). Payments for Child Care Subsidy will have been adjusted by the Department of Human Services for Withholding of payments of five per cent. Providers are required to pass the actual fee reduction amounts on to families within 14 days of receiving payment advice. If this does not occur, providers must return the fee reduction (see Returning a fee reduction).
When and how to invoice families is a business decision for each provider to determine. The Department of Education and Training does not recommend invoicing families using estimates of fee reduction (before Child Care Subsidy has been paid). This is because the actual amount of Child Care Subsidy paid (if any) may vary for a range of reasons that providers will not always be aware of, and therefore not be able to account for, in any such estimate. Providers may instead consider either:
- invoicing families for full fees for care in advance for the first period of care, with fee reductions applied to subsequent invoices, or
- issuing families with a joint Statement of Entitlement and invoice (in arrears) for the difference between agreed fees and fee reduction amounts after the end of each fortnight.
Providers should consider that when children start attending care while a claim is being assessed, any subsidy payable for this period (claims can be backdated up to 28 days) will generally be paid to the individual, not to the provider.
Parents can use the Payment and Service Finder to estimate their possible entitlement to Child Care Subsidy. However, actual fee reduction amounts cannot be confirmed except through the payment advice that will be provided by the Department of Human Services once session reports have been submitted and entitlements calculated.
What should a provider do if it cannot pass the subsidy on to the family?
If it is not reasonably practical for a provider to pass on fee reductions it has received to the relevant individual, the provider must remit the amount immediately and, if this is not done, the unremitted amount will become a debt that is owed to the Commonwealth by the provider.
The Department of Human Services can then make a separate payment of the individual's entitlement directly to the individual.