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Amount of Child Care Subsidy payments (entitlement)

Entitlements - overview

The amount of subsidy to which a family is entitled is determined by the:

There are caps on the hourly rate for which a subsidy will be paid, and in some cases on the total subsidy that will be paid in each financial year (see Hourly rate caps and Annual subsidy cap).

Withholding of payments will continue, as it reduces the likelihood of debt for individuals. An amount of five per cent of Child Care Subsidy entitlements is withheld from payment.

In exceptional circumstances, a determination can be made that a family should receive more hours of support than the standard entitlement (see Exceptional circumstances).

It is important that families keep Centrelink informed about any Change of family circumstances.

Family income

Family income is the annual adjusted taxable income of the individual and their partner (if they have a partner) and is used to determine the percentage of subsidy to which an individual is entitled.

To calculate the entitlements and payments for each child, the individual will need to provide a reasonable estimate of their annual adjusted taxable income directly to Centrelink. These details will be used along with the information submitted by the provider in their session reports, for the calculation.

The percentage of subsidy relative to income level is set out in Table 7, effective from July 2018.

The lowest income threshold will be indexed by the Consumer Price Index (CPI) annually, and all other income thresholds will be increased by the same dollar amount to match the rate at which the subsidy gradually decreases.

Table 7: Current levels of family income and the amount of Child Care Subsidy payable as a percentage of the actual fee charged or hourly rate cap, effective from 2 July 2018

Family income

Subsidy per cent of the actual fee charged or hourly rate cap, whichever is lower

Up to $66,958

85 per cent

More than $66,958 to below $171,958

Decreasing to 50 per cent*

$171,958 to below $251,248

50 per cent

$251,248 to below $341,248

Decreasing to 20 per cent*

$341,248 to below $351,248

20 per cent

$351,248 or more

0 per cent

*Subsidy gradually decreases by 1 per cent for each $3000 of family income.

Activity test

The hours of subsidised child care per fortnight that a family is entitled to is determined by an activity test. Depending on the combined hours of work, training, study, recognised voluntary work or other recognised activity undertaken, a family can receive up to 100 hours of subsidy per fortnight per child. Both the claimant, and their partner if they have one, must satisfy the activity test unless there is an exemption. For claimants who are partnered, the number of subsidised hours the family is entitled to will be based on the member of the couple with the lowest activity test result, even when an exemption applies.

The family or individual will provide activity details directly to Centrelink. These details will be used, along with the information submitted by the provider in their session reports, and the family's income, to calculate the entitlements and payments for each child.

Table 8: Hours of activity and maximum number of hours of Child Care Subsidy (per fortnight) per child

Hours of activity (per fortnight)

Maximum number of hours of subsidy (per fortnight) per child

For families earning up to $66,958

Less than 8 hours

24 hours

For families earning up to $351,248

8-16 hours

36 hours

More than 16 up to 48 hours

72 hours

More than 48 hours

100 hours

A broad range of activities meet the activity test requirements, including paid work, being self‑employed, carrying out unpaid work in a family business, looking for work, and recognised volunteering or studying. There are exemptions to the activity test for parents who legitimately cannot meet the activity requirements.

Low-income families on combined family incomes of $66,958 or less a year who do not meet the activity test can access 24 hours of subsidised care per fortnight under the Child Care Safety Net.

Families who do not meet the activity test, but have a preschool aged child attending preschool in a Centre Based Day Care service, will be exempt from the activity test and eligible for 36 hours of subsidised care per fortnight.

Families who need more than 100 hours of subsidised care per fortnight can apply to Centrelink for additional hours.

Caps and withholding

Hourly rate caps

Hourly rate caps are the upper limit on the amount the Australian Government will subsidise approved child care. They vary across service types to reflect differences in operating costs and average fees charged.

Combined with the family's Child Care Subsidy percentage, the rate caps will be used to calculate the amount of subsidy per hour each family is entitled to receive:

  • where a provider charges less than the hourly cap, families will receive their applicable percentage of the actual fee charged
  • where a provider charges more than the hourly cap, families will receive their applicable percentage of the hourly rate cap.

The family's out-of-pocket expenses will be the difference between the subsidy to which they are entitled (based on their income and activity levels) and the total fees charged by the provider. The caps will be indexed annually by the Department of Education and Training in line with the Consumer Price Index and published on the Department's website.

The government does not set child care fees - providers set their fees and parents pay the gap between the subsidy and the actual fee. However, the hourly rate caps serve as a guide to providers and families about what a 'high fee' might be.

The hourly rate caps are shown in Table 9.

Table 9: Hourly rate caps payable for children below school age and of school age, according to the type of child care service provided, effective from 2 July 2018

Service type

Hourly rate cap
(children below school age)

Hourly rate cap (school aged children)

Centre Based Day Care

$11.77

$10.29

Outside School Hours Care

$11.77

$10.29

Family Day Care

$10.90

$10.90

In Home Care

$25.48 (per family)

$25.48 (per family)

An individual is only eligible for child care fee assistance where a service imposes a liability on an individual by charging a real commercial fee for that care. A liability to pay that fee must already have been incurred irrespective of whether any subsidy is subsequently provided by the Government to reduce that liability.

Annual subsidy cap

Families with an adjusted taxable income of $186,958 or less have no annual cap on the subsidy they can receive. For families with income of more than $186,958 to less than $351,248, the annual subsidy cap is $10,190 per child, per year (indexed by CPI annually). Families with income of $351,248 or more cannot receive Child Care Subsidy.

Families can monitor their progress towards the annual subsidy cap through their Centrelink account.

The provider will be notified by the Department of Human Services through their third-party software or the Provider Entry Point if a family whose child is enrolled at a service has reached their annual subsidy cap. There will be no fee reduction amounts paid to the service in respect of that child from that time forward (for the remainder of the financial year) and they will have to pay the full fee agreed in the Complying Written Arrangement.

Withholding of payments

The amount that a provider will be paid, and that the individual will receive in the form of fee reductions, will be five per cent less than the individual's Child Care Subsidy entitlement. 

Withholding some of a family’s entitlement to Child Care Subsidy before it is paid to child care providers is a way to reduce the likelihood of families incurring a debt at the end of a financial year. The process of withholding does not reduce a family’s overall entitlement to Child Care Subsidy and is similar to the process of withholding some of a family’s Child Care Rebate if they also received any Child Care Benefit under the previous child care arrangements.

Some parents may have their withholding percentage varied from the default amount of five per cent. Providers will be able to see the amount withheld on the payment advice they receive each fortnight.

There is no withholding of Additional Child Care Subsidy payments.

For more information about withholding, see Withholding of payments.

Family circumstances

Exceptional circumstances

In exceptional circumstances, variations may be made to eligibility requirements, such as residency requirements, or to other conditions of Child Care Subsidy. These will be determined on a case-by-case basis. Families who are in, or have children in, circumstances that may be exceptional should contact Centrelink.

Change of family circumstances

The provider will receive notification of each individual's entitlement information once the individual has confirmed their enrolment notice. This information is viewable through the provider's third-party software or the Provider Entry Point. This information will include details of each individual's:

  • Child Care Subsidy percentage
  • number of subsidised hours per fortnight (the family's activity test result)
  • apportioned hours (where the child attends more than one service and the individual has chosen to apportion a certain number of their subsidised hours to each service)
  • Additional Child Care Subsidy percentage (if applicable)
  • whether the family has reached the Child Care Subsidy annual subsidy cap
  • a count of the number of absences the child has used in the current financial year.

When a family's circumstances change and this affects their eligibility and/or entitlement, they are required to notify Centrelink of the change as soon as possible. The provider will be able to see any change to the family’s entitlement through their third-party software or the Provider Entry Point.

Changes to a family's entitlement will generally take place from the beginning of the next Child Care Subsidy fortnight after the change occurred. Where a parent is late in reporting a change in their circumstances resulting in an overpayment of Child Care Subsidy for previous sessions of care, a debt may be raised. Parents will be notified through their Centrelink online account where debts are raised by Centrelink due to changes in their entitlement, for example, if their activity test result changes.

Where a parent is unsure about the details of a debt raised by Centrelink, they will need to log into their Centrelink online account for further details, or raise their questions with Centrelink.

Providers should encourage families to keep their details updated with Centrelink to help them reduce the risk of debt throughout the year and at reconciliation.

Grandparent carers

Grandparent principal carers not on income support may be eligible for Child Care Subsidy. These grandparents will be entitled to 100 hours of subsidised child care per fortnight irrespective of their activity, with the rate of subsidy based on their, or any partner's, income.

Grandparents who are not principal carers of their grandchildren, but have regular or shared care of the child, may be eligible for Child Care Subsidy, based on their income and hours of recognised activity.

If those grandparents do not meet the Child Care Subsidy activity test and earn less than $66,958, they will be able to access 24 hours of subsidised care per fortnight at 85 per cent of the hourly rate cap.

Grandparent principal carers who are on income support will be supported through Additional Child Care Subsidy (grandparent).