Making sense (and cents) of the Child Care Subsidy.

Horror stories about astronomical fees for childcare are rampant and regardless of whether you’re a new parent, or a curious onlooker trying to get a handle on the situation, it can be tricky trying to work out how much families actually pay for a day in care. 

Yep, it’s true childcare costs money, in some cases a lot of money, but often the prices trotted out to the media are the prices before significant government subsidies are taken into account. 

That’s where we can help! Keep reading for everything you need to know about the Child Care Subsidy (CCS), including how much you may get and how to apply.  

The CCS and how it works 

The CCS, or Child Care Subsidy, is the main government payment available to help families with the cost of care and the first thing you need to know is that the CCS is not paid to families, but to childcare providers who pass on the subsidy as a reduction in fees.  

Parents pay the difference between their childcare provider’s fees and the subsidy amount paid by the government. This is referred to as the ‘gap fee’ or ‘out-of-pocket cost’ for childcare. 

 

The gap fee a parent pays depends on how much their childcare service charges and how much CCS they are eligible for.  

Who is eligible for CCS? 

To receive the CCS, you or your partner must: 

• Care for your child at least two nights per fortnight (or 14% of the time)
• Be responsible for paying the fees at an approved childcare service, such as family day care, long day care or outside school hours care
• Meet residency requirements. 

 

In addition, your child must:  

• Meet immunisation requirements and be up-to-date on the National Immunisation Program Schedule or on a catch-up schedule (or have an approved exemption) 
• Not be attending secondary school (unless an exemption applies). 

 

How much CCS do you get? 

Ah, if only there was a straightforward answer to this! Sadly, there is not, and the amount of CCS you receive depends on your unique family circumstances. 

To work out your CCS entitlement the government looks at:  

1. Your family income 
2. The hourly rate cap of your childcare type and your child’s age
3. How many children you have
4. How much work or activity you (and your partner, if you have one) do. 

We’re going to take a look at each of these below: 

1. Your family income

The CCS is means tested and the amount you receive is based on your family income estimate.  

Generally speaking, families who earn less attract a greater CCS percentage than those on higher incomes.  

The CCS percentage is the portion of childcare fees paid for by the government and it applies to either the hourly fee or hourly rate cap charged by your childcare centre, whichever is lower.  

You can learn your CCS percentage by checking this table: 

You can claim the CCS even if your family income estimate is $354,305 or more and if you earn less than this, the subsidy you’re entitled to will be paid when the government balances your payments at the end of the financial year (30 June). 

To avoiding overpaying the CCS and landing families in debt, the government withholds 5% of your CCS.  

When they balance your payments at the end of the financial year, using your taxable income as decided by your tax return, they will either pay you more, if you haven’t received the correct amount, or in the case of an overpayment, they will ask you to repay the amount owing.  

To avoid a CCS debt, it’s important to estimate your family income as accurately as possible.  

2. The hourly rate cap of your childcare and your child’s age

Your CCS amount also depends on the type of childcare you use and, in some cases, the age of your child. As you can see from the table below, centre based care attracts the highest amount of CCS. 

Remember, the rates listed above are the maximum subsidy amount each type of childcare service attracts, they are not the fees that you will be charged.  

Each childcare service sets their own fees and your CCS amount is calculated using this rate cap, your family income and the amount of work you do (more on that later).  

If your childcare service charges less than the maximum hourly rate cap, you’ll receive your CCS as a percentage of the fee charged, and if your childcare service charges more, then you’ll have to pay the gap fee.  

It sounds confusing, but in practice, the government works out all the details and as long as you have estimated your family income accurately you should be fine! 

If in doubt, check out the KindiCare Subsidy Calculator.

3. How many children you have

Earlier in 2022, the government changed the rules to make childcare more affordable for families with more than one young child in care. Eligible children now receive a 30 per cent higher subsidy up to a maximum rate of 95 per cent. 

Families don’t need to do anything to receive the higher rate, this is all worked out by the government at the back end and automatically reported to childcare services. 

4. How much work/activity you do each week

The CCS is all about getting parents back to work, so the amount of work or ‘recognised activity’ you (and your partner) do has a direct impact on how much subsidised childcare you can access.  

Recognised activity covers paid work, but it also includes parental leave, unpaid work in a family business, unpaid work experience, setting up a business, study, training to improve employment prospects, volunteering, job-seeking and more.  

You can learn more about recognised activities here and there are four levels of activity that are used to work out how much CCS you receive.  

There are lots of special conditions for people combining activities, on carer’s leave or volunteering and it’s worth clicking here if your circumstances are a little outside the ordinary.  

How to apply 

This is a lot of info to take in, but fortunately the government does a lot of the work behind the scenes, so as long as you are eligible and provide the correct details, the CCS should run smoothly for you.  

Also, remember the KindiCare Subsidy Calculator makes it super easy to work out what level of subsidy you may be eligible for.  

To start your claim for the Child Care Subsidy, click here.