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Liability for payment

Can discounts be offered?

Yes. Family Assistance Law does not regulate what fees providers may charge for a session of care—this is a matter for providers. However, a fundamental principle and requirement under Family Assistance Law is that Child Care Subsidy is always calculated on the actual fee the parent is liable to pay for each session of care.

Providers are required by legislation to report accurate details about each session of care, including the actual fee charged. Therefore, where a provider decides to charge a parent less than the usual rate for a session of care (for whatever reason) this is the fee the provider must include in the session report. This will ensure the provider complies with its obligations under the Family Assistance Law and that the family’s Child Care Subsidy entitlement is calculated correctly. Similarly, if a provider charges a parent more than the usual rate for a session of care (such as a surcharge in accordance with their Complying Written Arrangement), this is the fee the provider must report.

If a parent is not charged a fee (or is charged a lower than usual fee), as part of an incentive offer, the provider must accurately reflect this in the relevant session reports. Providers must also ensure their arrangements with parents, including any incentives offered, comply with relevant state or territory consumer protection laws—for example, with respect to unfair contract terms and misleading conduct.

Can third parties pay the Child Care Subsidy gap fee?

Generally, only state and territory governments (and their agencies) can contribute to the payment of the gap fee, in part or in full. ,Other third parties (such as employers and charities) cannot pay the gap fee except in exceptional circumstances. In such cases the Government will notify providers via the usual communication channels.

A key principle and requirement under Family Assistance Law is that all parents who receive Child Care Subsidy should make a co-contribution to their child care fees. The co-contribution (or gap fee) is the total of the fees the parent is liable to pay for sessions of care minus the amount of Child Care Subsidy paid in respect of those fees and sessions.

Therefore, it is not possible for a third party to pay the gap between the fee a parent is charged and the amount of subsidy paid for a session of care. Where a third party pays part of a parent’s fees for a session of care, the provider must reduce the fee reported accordingly to ensure the family’s Child Care Subsidy and their co-contribution are calculated as required by the legislation—based on the amount the parent is actually liable to pay for the session of care.

Scenario: Third-party payment of fees

A third party can pay part of the family's child care fees. This approach can reduce, but not eliminate, the family's co-contribution to their fees, and the family can still benefit from Child Care Subsidy.

If the parent is entitled to the maximum 85 per cent rate of Child Care Subsidy and their provider charges $100 per session, the family would ordinarily receive $85 in Child Care Subsidy and make a $15 co-contribution (not taking into account withholding).

If a third party agrees to pay $15 of the $100 fee, the parent is now liable for $85 per session (this is the fee the provider must report). This means the parent's Child Care Subsidy entitlement would be 85 per cent of $85 ($72.25), leaving the family with a co-contribution of $12.75 (rather than $15).

A third party could elect to pay the entire fee for either some or all the sessions of care that the child attends. In such a case, where a third party pays the entire amount for a session of care for a parent, the parent will have no entitlement to Child Care Subsidy for that session of care but would also have no out-of-pocket child care expenses for that session.

A third party can also provide financial assistance directly to the family to help them with general household expenses (which might include weekly out-of-pocket costs for child care). As this type of contribution does not have a direct impact on the child care fees the family is liable to pay, it does not affect their Child Care Subsidy entitlement.

Contributions towards fees from state and territory governments

State and territory governments (and their agencies) can contribute to the payment of the gap fee, in part or in full. Payments from state or territory governments, or authorities of state or territory governments, that are made to providers to reduce the child care fee liabilities of disadvantaged and vulnerable families are not required to be deducted from the total fee reported to calculate the CCS.

In the scenario above, the state and territory government may pay up to $15 and the CCS is not impacted for the family. As the state and territory payments are only covering the gap fees, providers are not required to reduce the actual fees charged to families, before applying CCS. Session reports will remain the same as under normal practice. Providers must ensure they record any payments from state and territory government in the parent’s CWA.

Can third parties pay Additional Child Care Subsidy gap fees?

The requirement for providers to reduce the hourly session fee by any other subsidy applies to the fee charged for any session of care, regardless of whether the family is eligible for Child Care Subsidy or Additional Child Care Subsidy. As such, providers are always required to report fees in accordance with this provision by reducing the fee charged by the amount of any third-party contribution.

Where a family is eligible for Additional Child Care Subsidy (child wellbeing), Additional Child Care Subsidy (grandparent) or Additional Child Care Subsidy (temporary financial hardship) and the hourly session fee is less than or equal to the applicable Additional Child Care Subsidy hourly rate cap, there is no co-contribution for the parent to pay. In this scenario, these payments will cover 100 per cent of the actual fee charged.

On occasion, a provider may charge more than 120 per cent of the applicable Additional Child Care Subsidy hourly rate cap for a session of care, meaning that the hourly rate of Additional Child Care Subsidy will exceed the hourly session fee. That is, for any given session there is a difference between the fee and amount of subsidy paid. The provider would ordinarily be required to take all reasonable steps to ensure the parent pays this gap.

However, a third party can agree to pay this gap amount on behalf of the parent. There would no longer be any difference between the hourly session fee and the hourly rate of Additional Child Care Subsidy. That is, there is no parent co-contribution for the provider to enforce.

If the provider did not reduce the fee by the third-party contribution when reporting the fee, they would still be required to take all reasonable steps to ensure the parent paid the gap between the fee charged and Additional Child Care Subsidy paid (despite the third party agreeing to pay this amount).

Scenario: Third-party payment of fees—Additional Child Care Subsidy

A Centre Based Day Care service charges $150 for a 10-hour session of care. The Additional Child Care Subsidy hourly rate cap is $14.38, which translates to an Additional Child Care Subsidy payment of $143.80 per 10-hour session. A child protection agency agrees to pay the outstanding $6.20 of the fee per session.

The provider correctly reports the session fee as $143.80, meaning there is no difference between fee reported and subsidy paid and therefore no co-contribution for the provider to enforce. The provider recoups the total fee of $150 through a combination of the Additional Child Care Subsidy ($143.80) and the third-party contribution ($6.20).

How a provider demonstrates to a third party the difference between their original fee and the amount of Additional Child Care Subsidy paid for a session is a matter for the provider and third party to determine.

There is scope for a third party to pay the entire gap where parents are receiving Additional Child Care Subsidy (child wellbeing), Additional Child Care Subsidy (temporary financial hardship) or Additional Child Care Subsidy (grandparent), as outlined above.

This is contrasted with Additional Child Care Subsidy (transition to work) and Child Care Subsidy, where it is not possible for third parties to reduce the gap to zero. This is because the maximum rate of Additional Child Care Subsidy (transition to work) is 95 per cent (of the hourly session fee or hourly rate cap), whereas the maximum rate for the other three Additional Child Care Subsidy payments is 100 per cent (of the hourly session fee; up to 120 per cent of the hourly rate cap).