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Calculating your Child Care Subsidy

As more information about the new Child Care Subsidy (CCS) package rolls out, we are getting a clearer picture of how the system will work and affect you. Let's start with a question that we are asked a lot: what will my fees be under the new system?

The basics

Three factors are used to calculate your fees:

  1. The type of service your child attends (centre-based care, family day care or outside school hours care). This will determine the hourly rate cap.
  2. Your combined family income. This will determine the % of your hourly fees you can claim (your CCS %)
  3. Your activity. This is the amount of time spent on specific activities, such as paid work, self-employment and volunteering. Interesting, time spent looking for work will also count. This will determine the number of hours you can claim.

Once you have determined your CCS % and claimable hours, calculate your subsidy using the formula:

CCS Subsidy = (minimum of the hourly rate cap or the hourly rate your service charges) x (minimum of claimable hours or hours your child attends the service) x (Your CCS %)

The difference between the amount that your service charges and the CCS subsidy will be your contribution commonly referred to as the gap fee.

Like the current CCR arrangements, 10% of your CCS Subsidy will be withheld and reconciled at the end of the financial year. More on this below.

Want a shortcut?

Instead of doing some enjoyable excel work (sarcasm intended), the Department of Education has put together a handy benefit calculator. The calculator will take you through a few steps to help you calculate your benefit. It takes a while to complete but it is a worthwhile exercise.

The Department withholds 10% of your subsidy until tax time

As the Government sets out in its explanatory materials, 10% of your CCS subsidy will be withheld. You will need to pay this difference to your service as a part of your regular billing cycle. The reconciliation of your entitlements will happen at the end of each financial year (when the ATO gets a good view of your family income). Any outstanding amounts will be paid back to the family as a lump sum.

The rationale? When circumstances change, the government would rather avoid collecting the debt from families. By withholding this amount, they can do a reconciliation and minimise the risk parents owing a balance when they have received a subsidy greater than their entitlement.

Need additional assistance?

The new package consolidates the various additional benefits into a package called Additional Child Care Subsidy.

Four additional benefits are available under this package:

  1. Child Wellbeing
  2. Grandparents
  3. Temporary Financial Hardship
  4. Transition to Work

The first three benefits allow for top-up payments to cover the whole fee charged by the service, so long as this is below 120% of the hourly rate cap. Similarly, the Transition to Work benefit allows a top-up up to 95% of the hour rate cap.

The Department recommends that you contact your service if you believe any of the above may apply to you.

Doesn't make sense?

We know how complex these changes can be. If you have any questions, feel free to get in contact with our Support team. We're always here to help.

Topics: fees subsidy ccs child care