BY HEJIRA CONVERY, KINDICARE

JUNE 27, 2024

Families don’t generally celebrate the New Financial Year with the same excitement as New Year, but that doesn’t mean 1 July is a fizzer!  

The 2024-25 Financial Year will actually start with the release of the Productivity Commission’s final inquiry report around early childhood education and care (ECEC), and from 1 July, the federal government will be closely reading their recommendations to see how our ECEC system can be improved for the good of everyone involved. 

If you’re paying childcare fees, you’ll be crossing your fingers (and toes) for a move towards super cheap childcare, but for the moment, it’s good to know that July 2024 will bring some small increases to the Child Care Subsidy (CCS).  

Assuming you’re eligible for it, the CCS makes a real difference to the out-of-pocket fees you pay, and each year, CCS figures are adjusted slightly, based on the Consumer Price Index (which is a measure of inflation released by the Australian Bureau of Statistics).  

This means that from 8 July 2024, you can expect the following changes: 

1. The family income thresholds for the Child Care Subsidy will go up.  

Services Australia uses your annual family income estimate to calculate how much they’ll subsidise your childcare fees, and for the 2024-25 tax year you’ll find that: 

• If your family earns up to $83,280, you will get a subsidy rate of 90% (up from the 2023-24 income threshold of $80,000) 

• If you earn more than $83,280 and less than $533,280, your subsidy rate will decrease from 90%, going down by 1% for every $5,000 your family earns, and 

• If your family income is $533,280 or more, your subsidy rate will be 0% and the government won’t chip in for your childcare fees (which represents a little increase on the 2023-24 cut-off of $530,000). 
  
  

2. The $80,000 to $83,280 threshold change will also have an impact on how many hours of subsidised care some families can get in 2024-25.  

Specifically, if your family clocks less than eight hours of recognised activities each fortnight, you’ll be entitled to 24 hours of subsidised care per child, per fortnight if you earn $83,280 or below, and zero hours if you earn more than $83,280.  

Some things haven’t changed though, and if you have an Aboriginal and/or Torres Strait Islander child, you can get at least 36 hours of subsidised care for them per fortnight, regardless of your family’s activity.  

3. Changes to family income thresholds for 2024-25 will have an effect on subsidy rates for second and younger children.   

Anyone with two or more children in ECEC will know that fees soon add up, so we’re happy to report that in the 2024-25 tax year, the government will still offer a subsidy rate of up to 95% for a family’s second child and younger children. 

In 2023-24, you had to be earning $138,118 or less as a family to attract the 95% subsidy rate, but for 2024-25, this income threshold will rise to $141,321, meaning you can earn a little bit more and still get that big help with fees.   

There are also changes to other income thresholds for second and younger children subsidy rates (amounting to around $3,000 difference for each income bracket), and you can read the details here.

4. From 8 July 2024, the hourly rate caps for the CCS will also rise.   

As you may know, the government applies your CCS percentage rate to the hourly fee charged by your childcare service OR the hourly rate cap that applies to it (whichever figure is lower).  

This means that the type of care you use and the specific service you choose has an influence on the fee-relief you get, and when it comes to 2024-25 hourly rate caps, there are small increases for each care type: 

• Centre based care for early learners will go from an hourly rate cap of $13.73 to $14.29 

• While, the hourly rate cap for early learners attending family day care will increase from $12.72 to $13.24. 

If your child is using outside school hours care, or your family uses In Home Care, the hourly rate caps are different again, and you can see them here.  

All in all, there are lots of different numbers doing the rounds, depending on your family circumstances and childcare use. 

If you’re feeling confused about anything, you can ask your ECEC service or trusty Services Australia contact for help. 

And if you’re getting the CCS, there are two main things you need to do as we move into the New Financial Year. 

The first is to check that all your details are up-to-date in myGov, ensuring that you tell the government about changes in your circumstances, like that pay rise or new address.   

And the second thing you need to do, is confirm you and your partner’s income for the 2023-24 financial year, so the government can ‘balance’ your CCS from mid-August and make sure you got the right amount.  

For most families, this just means lodging a tax return with the ATO, and if you’d like more info about CCS balancing, or don’t need to lodge a tax return, this page will help.  

And although the New Financial Year isn't as exciting as the New Year...

We do hope there’s something to celebrate when the federal government looks at different ECEC recommendations and decides how to make our childcare system affordable (and amazing) for everyone.  

 

Update: The Productivity Commission handed its final inquiry report to the federal government on 28 June 2024, so our leaders are busy reading its recommendations, and we'll wait to see what they make of them.