Reconciliation is also referred to as ‘income review’ or ‘balancing payments’. For Child Care Subsidy purposes, individuals are required to meet reconciliation conditions by either:
- lodging a tax return
- submitting an advice to Centrelink and the Australian Taxation Office (ATO) that they are not required to lodge a tax return.
These obligations also apply to any partner of a claimant.
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 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.
Reconciliation occurs between the individual and Centrelink. Providers are not involved in this process. However, providers should be aware that an individual’s Child Care Subsidy payments may be affected if they have a debt arising from reconciliation or if reconciliation does not occur.
How is the provider affected if a family does not complete its reconciliation?
The first deadline by which reconciliation conditions must be met by individuals is one year after the end of the financial year in which Child Care Subsidy was paid—that is, 1 July of the following year. If the individual does not meet the reconciliation conditions by that deadline, further payments will be suspended until reconciliation occurs.
If an individual meets the reconciliation conditions after the first deadline but before the second deadline (see below), their Child Care Subsidy payments can resume only from that point.
The second deadline is the end of the second year after the financial year in which Child Care Subsidy was paid and is subject to reconciliation. If reconciliation conditions have not been met by the second deadline, the individual will lose their eligibility for Child Care Subsidy and will be liable to pay back the total amount of subsidy they received during the financial year in which payments were made.
Loss of eligibility for Child Care Subsidy also means that any Additional Child Care Subsidy will cease.