Child Care Subsidy

The Child Care Subsidy builds on the Productivity Commission’s recommendations and will make the system more affordable, accessible and flexible.

When the Child Care Subsidy commences in July 2018, it will:

  • replace the Child Care Benefit (CCB) and Child Care Rebate (CCR) with a single, means‑tested subsidy

  • be paid directly to service providers to be passed on to families

  • be simpler than the current multi-payment system

  • be better targeted and provide more assistance to low and middle income families.

Families earning $65,710^ or less will receive a subsidy of 85 per cent of the actual fee charged (up to 85 per cent of an hourly fee cap). For family incomes above $65,710^, the subsidy tapers down to 20 per cent when family income reaches $340,000^. For families with incomes of $350,000^ or more, the subsidy is zero per cent.

Combined Family Income

Subsidy per cent of the actual fee charged (up to relevant percentage of the hourly fee cap)

Up to $65,710^

85 per cent

More than $65,710^ to below $170,710^

Tapering to 50 per cent*

$170,710^ to below $250,000^

50 per cent

$250,000^ to below $340,000^

Tapering to 20 per cent*

$340,000^ to below $350,000^

20 per cent

$350,000^ or more

0 per cent

*Subsidy tapers down by 1 per cent for each $3000 of family income.

When the subsidy commences the hourly fee caps will be:

Service type

Maximum hourly fee cap

Centre Based Long Day Care

$11.55^

Family Day Care

$10.70^

Outside School Hours Care

$10.10^

^ Note: These provisions of the Package will be increased by CPI for implementation in July 2018.

For families earning more than $185,710^, an annual subsidy cap of $10,000^ per child will apply.

Activity test

Family entitlement to the Child Care Subsidy will be determined by a three-step activity test, more closely aligning the hours of subsidised care with the combined hours of work, training, study or other recognised activity undertaken, and providing for up to 100 hours of subsidy per fortnight. 

Step

Hours of activity (per fortnight)

Maximum number of hours of subsidy (per fortnight)

1

8 hours to 16 hours

36 hours

2

More than 16 hours to 48 hours

72 hours

3

More than 48 hours

100 hours

A broad range of activities will meet the activity test requirements including: paid work; being self‑employed; doing unpaid work in a family business; looking for work; volunteering or studying. There will be exemptions to the activity test for parents who legitimately cannot meet the activity requirements.

Low income families on $65,710^ or less a year who do not meet the activity test will be able to access 24 hours of subsidised care per fortnight without having to meet the activity test, as part of the Child Care Safety Net.

For the first time, families who currently use Budget Based Funded services will be eligible for child care fee assistance.