New Childcare subsidy changes: What do they mean to your family?
As a parent who also works in the childcare sector, I love speaking with my mum friends on all topics relating to childcare, especially any childcare savers. What surprised me recently was that some of my friends were not aware of the changes or how the new childcare subsidy laws benefited or impacted their family (or growing) family. As you will see in this article, every family may be slightly different. If you think you know how it works, I might surprise you with the fine print.
New family income estimate
The Australian government has finally increased the Childcare Subsidy income requirements which are based on your family income estimate and work or study needs. If you have not previously registered for Childcare Subsidy, I highly recommend you ring Centrelink to begin the process today. If you delay this, you will not be eligible for any backdate of payments as it goes from the date of registration. Once you are all set up and you have linked your Children’s childcare to your Centrelink account, you can manage most things via an app. But remember that the government will reconcile your family income estimate vs your actual taxable income and they will settle all debts shortly after you have lodged your tax return. They know that this is sometimes problematic so they withhold 5% of any eligible subsidy in case you have a debt. They will provide you with the 5% after you lodge your tax return if you are entitled to it. In my opinion, it is always a good idea to register even if you aren’t eligible for any subsidy as your ‘estimate’ may be more than your ‘tax’ return and you will be paid back.
| Your family income | Child Care Subsidy percentage |
|---|---|
| $0 to $70,015 | 85% |
| More than $70,015 to below $175,015 | Between 85% and 50% The percentage goes down by 1% for every $3,000 of income your family earns |
| $175,015 to below $254,305 | 50% |
| $254,305 to below $344,305 | Between 50% and 20% The percentage goes down by 1% for every $3,000 of income your family earns |
| $344,305 to below $354,305 | 20% |
| $354,305 or more | 0% |
Source:www.servicesaustralia.gov.au/your-income-can-affect-child-care-subsidy
Higher subsidies for families with two (or more) children aged 5 or younger
From 7 March 2022, any family registered with Centrelink will automatically receive a higher subsidy for the second (or subsequent) child if aged 5 or under. To get the higher subsidy, a family must:
- Earn under $354,305
- Have more than one child under 5 enrolled into childcare.
Eligible higher rate children will receive a 30% higher subsidy, up to a maximum 95%. You will be notified of the changes but its always good to check with your centre or Centrelink.
Some interesting things to consider with these new rules are:
Multiple births:
The government will automatically decide who is the youngest child if born on the same date. If you are a type A, you may not get a choice on this sorry. You are welcome to contact Centrelink if you want this recorded in a specific way.
Blended families:
As with everything diverse, it is still a challenge for our government rules.
If your family has different CCS accounts for different children in your family, then your higher subsidy will not be applied until July 2022. Any missed payments will be backdated.
If you want to receive the higher CCS amount before July 2022, you need to choose one member in your family to claim the CCS for all children. This would be like applying all over again and may not be a convenient option for your family.
But if you take up this option, you must update your enrolments at your centre to ensure you are compliant with the Subsidy Laws.
I can see this being problematic so be prepared to ring Centrelink a few times about this one! I don’t understand how because you need to register all relationships to your Centrelink account.
Different Centres:
If your children attend different centres than this may cause a delay in you receiving the higher subsidy also. I was unable to find anything online about this but this is a little industry knowledge of how the system works.
Centrelink Debts:
The government put a pause on any centrelink debts during COVID-19 so I see this biting a lot of good people in the you know what. If you have a Centrelink debt, you are provided with the total amount and 28 days to pay or dispute this debt. What people aren’t talking about is that your subsidy may stop until it’s been paid back. I was unable to find anything concrete online but it is known that Centrelink will just deduct the debt from any payments you’re eligible for. This is obviously very problematic as Childcare is expensive without funding and the Subsidy is there to help working families to offset the costs. If this occurs, it is not your centre’s fault as they just charge the fees after any subsidy is applied. If you are a Nurch member, you will earn points on all the gap fees you pay so you will see more points in your Nurch bank and it might be the childcare saver you need after all of this.
If you need any assistance with Centrelink Debts, please click HERE
As I am writing this, I am following the political race closely as every party has a ‘pledge’ on how they will make childcare more affordable or run a slander campaign on why their opposition’s pledge is not in the best interests of Australians. I can see why people get confused as to what the subsidy funding laws are. Please be sure to understand that any government making ‘pledges’ needs to go through many hoops to have funding changed. I am confident that these new laws will stick around for at least a few years.
