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Entitlements

How is Child Care Subsidy determined?

The amount of Child Care Subsidy paid for care is determined by:

  • family income—the adjusted taxable income of the individual claimant and their partner (if they have one)
  • results of an activity test—this test considers the number of hours in a Child Care Subsidy fortnight that an individual engages in a recognised activity (such as paid work or a training course to improve their employment prospects) and affects the number of hours of subsidised care available to the individual
  • type of eligible child care services—a different Child Care Subsidy hourly rate cap applies depending on the type of service the child attends.

There are caps on the number of hours of care families can receive subsidy for each fortnight, the hourly rate of subsidy and, in some cases, the total subsidy that can be paid in each financial year.

There may also be an annual cap of the total subsidy that can be paid to an individual each financial year, determined by the individual’s adjusted taxable income for the year.

In exceptional circumstances, a determination can be made by the Department of Education that a family should receive more hours of support than the standard entitlement.

For more information on Child Care Subsidy, see Appendix A.

How is Additional Child Care Subsidy determined?

Additional Child Care Subsidy provides additional fee assistance to support vulnerable or disadvantaged families and children. There are four different payments under the Additional Child Care Subsidy.

The types of Additional Child Care Subsidy, and a general outline of how they are calculated, are as follows:

  • Child wellbeing—a subsidy equal to 100 per cent of the actual fee charged, up to 120 per cent of the Child Care Subsidy hourly rate cap, for up to 100 hours of assistance per fortnight.
  • Grandparent—a subsidy equal to 100 per cent of the actual fee charged, up to 120 per cent of the Child Care Subsidy hourly rate cap, for up to 100 hours of assistance per fortnight.
  • Temporary financial hardship—a subsidy equal to 100 per cent of the actual fee charged, up to 120 per cent of the Child Care Subsidy hourly rate cap, up to 100 hours of assistance per fortnight. It is limited to 13 weeks per event that gives rise to the temporary financial hardship.
  • Transition to work—a subsidy equal to 95 per cent of the actual fee charged (up to 95 per cent of the Child Care Subsidy hourly rate cap).

For more information on Additional Child Care Subsidy, see Appendix B.

How does withholding affect payments?

The Department of Human Services withholds a percentage of Child Care Subsidy (this is usually 5 per cent) to reduce the likelihood that individuals will incur debts. This means that the full subsidy amount, less the withholding amount, is paid to providers on behalf of families following submission of session reports. Providers will be able to see the amount withheld on the payment advice they receive each fortnight. The amount withheld will be part of the gap fee that needs to be paid by parents to the provider.

After the end of each financial year, when the individual (and their partner) settles their tax affairs (usually by submitting their tax return), the total entitlements and payments for each child will be reconciled against the individual’s (and any partner’s) actual adjusted taxable income and activity for the year. After this review, any outstanding subsidy amount will be paid to the individual or they will be advised of any debt that they have incurred. This process of reviewing and recalculating entitlements for the full year is called ‘reconciliation’ (also called income review or balancing payments) (see What is reconciliation?).