This article is brought to you courtesy of Australian Government Department for Education and Training (DET).
Navigating the complex world of choosing the right child care and then working out how much you have to pay is no easy feat.
And…as soon as you think you have your head around it all, everything changes!
That’s right, from July 2, 2018 there will be a New Child Care Package.
Here’s all you need to know.
Under the new package, the current Child Care Rebate and Child Care Benefit will be replaced by a single Child Care Subsidy.
The Government will subsidise the cost of your child’s care up to an hourly rate cap and pay the new subsidy directly to your provider. You are only required to pay the difference.
The changes are all really straight forward and best of all, there is an online estimator. Just enter details about your own personal situation and you will get an estimate of what subsidy you might be entitled to, compared to what you might be roughly paying now.
The first thing you need to know is how the new Child Care Subsidy is calculated. The Government will look at three things – combined family income, activity levels of parents and the type of child care being accessed.
Let’s take a look at what these things actually mean.
1. Combined Annual Family Income
This is what a family’s earns in total. The amount of income is what determines the percentage of Child Care Subsidy that each particular family is eligible for.
A huge change is that the annual subsidy cap for lower and middle-income families has been removed. At the moment this is $7,613 per year. This means that most lower and middle-income families will be able to receive more subsidy for their child care than they currently do.
For higher-income families earning more than $185,710^ and below $350,000^ pa the cap has been raised from $7,613 to $10,000^ per child, per year.
These figures will be increased by the Consumer Price Index (CPI) when the package begins in July 2018.
2. Activity Level of Parents
Here will be changes to the activity test that will look at what each parent does in one fortnight to determine the number of hours of subsidised care your family can access.
The test will be based on the parent with the lowest hours of activity per fortnight.
Simply put, the higher the level of activity, the more hours of subsidised care the family can access, maxing out at 100 hours per child, per fortnight.
“Activity” doesn’t necessarily always mean paid work. It also covers things such as paid annual and parental leave, self-employment, volunteering or undertaking unpaid work in a family business, studying or attending training courses and job hunting.
Other activities that may not fall directly into one of these categories will be looked at on a case-by-case basis. The good news is that these activities can be combined, for example if you work part-time and study, both will be recognised. Even travelling time to and from your “activity” to your child care centre will be counted!
Additionally, your hours of activity don’t need be within your child care centre’s operating hours. That means if you work nights, you can still access subsidised care during the day.
Low income families on $65,710^ or less a year, who do not meet the activity test will also be able to access 24 hours of subsidised care per child per fortnight.
There will also be exemptions for parents who legitimately cannot meet the activity test requirements.
3. Type of Child Care Service
Parents in Australia have the choice of sending their children to centre based care, family day care or outside school hours care (before or after school and vacation care). The choice of care is also taken into consideration when determining your Child Care Subsidy.
It’s important to note that each child care service type is subject to a different hourly rate cap, which the subsidy rate is based off. Click here to find out which rate cap your child care service falls under.
4. Child Care Safety Net
The New Child Care Package also includes a Child Care Safety Net, to allow children from vulnerable and disadvantaged backgrounds, including those from regional and remote communities, to access quality early learning and child care.
The Additional Child Care Subsidy is part of the Child Care Safety Net and is designed to support families who require practical help to support their children’s safety and wellbeing, Grandparents who have taken on the role of primary carers, families who may be experiencing financial hardship and families making the transition from income support to employment. In most situations, this subsidy will cover all of a child’s child care fees.
What do I need to do?
The current arrangements do not change until 2 July 2018. To estimate what your new subsidy might be try out the Family Child Care Subsidy Estimator. Finally, to find out more information on the New Child Care Package and to keep up to date with what you need to do visit: www.education.gov.au/childcare.
1. One parent working full time, other works part time
Joe and Emily have two young children in centre-based care. Joe works full time and Emily works 18 hours a week in an admin role. Their family income is $85,000 pa. Based on Emily’s activity (as she has the least amount of activity) the family has access to 72 hours per fortnight of subsidised child care. The children attend care three days a week and the centre is open from 6am-6pm (12 hours). A daily session fee is $106.
Outcome: Under the current system Emily and Joe would be receiving approximately $890 per fortnight in Child Care Benefit and Rebate. Under the new Package, Joe and Emily would be better off as their Child Care Subsidy would be $1,000 per fortnight and they will also no longer be limited by an annual cap, currently fixed at $7,613 per year.
2. Both parents working Full-Time
Simon and Jenny both work full time (38 hours a week). Their combined family income is $130,000 pa. Based on their activity, which is the same for both, Simon and Jenny can access 100 hours of subsided child care per fortnight. They have two school-aged children in after school care for 10 sessions per fortnight. The daily session fee is $30 per child and the session is 3 hours.
Outcome: Under the current system they would be receiving approximately $340 per fortnight in Child Care Benefit and Rebate. Under the new Package the Child Care Subsidy they would receive is around $380 per fortnight.
3. Family on a single income
Greg works full time and his wife Felicity is a stay-at-home mum. Their youngest child is in family day care one day per week when Felicity volunteers at the local nursing home for 4 hours per week. The family day care operates for 12 hours per day. The daily session fee is $98 per day. Greg earns $75,000 pa. Based on Felicity’s activity (as she has the least amount of activity) the family has access to 36 hours per fortnight of subsidised child care.
Outcome: Under the current system Greg and Felicity would only receive the Child Care Benefit, of $100 per fortnight. Under the new Package their Child Care Subsidy would be around $160 per fortnight.
4. Single parent working Full – Time
Meredith works full time (38 hours a week) and has two children in centre-based care, five days a week. The daily session fee is $100, and the centre operates for 10.5 hours a day. She earns $87,000pa. As Meredith is a single parent her Child Care Subsidy is based solely on her activity, which gives her access to 100 hours per fortnight of subsidised child care.
Outcome: Under the current system she would be receiving approximately $1,240 per fortnight in Child Care Benefit and Rebate. Under the new Package her Child Care Subsidy would be around $1,480 per fortnight. Meredith would no longer be limited by an annual cap, currently fixed at $7,613 per year.
5. Single parent working Part – Time
Lewis has one child at family day care 3 days a week and he works 30 hours a week. A day session costs $90 and operates for 10 hours a day. He earns $60,000 pa. As Lewis is a single parent his Child Care Subsidy is based solely on his activity, which gives him access to 100 hours per fortnight of subsidised child care.
Outcome: Under the current system he would be receiving approximately $420 per fortnight in Child Care Benefit and Rebate. Under the new Package his Child Care Subsidy would be around $460 per fortnight.
*These figures may be subject to adjustment through indexation.