On 2 July 2018, the Federal Government will replace the Child Care Benefit (CCB) and Child Care Rebate (CCR). It will be replaced with a single means-tested subsidy, known as the Child Care Subsidy (CCS). Child Care Subsidy will be paid directly to your approved child care provider/s to reduce the fees you pay.
In April 2018 all families currently in receipt of CCB and/or CCR for approved care should have received a Centrelink letter. It is mainly all about transitioning to the Child Care Subsidy (CCS).
You should follow the instructions in your letter. Go online to complete your Child Care Subsidy assessment or claim for Child Care Subsidy as soon as possible. It is important to action now and prepare for the Child Care Subsidy to ensure your eligibility and entitlement is assessed. You should complete a Child Care Subsidy assessment or claim before 2 July 2018. This is to ensure you don’t miss out on child care fee assistance from 2 July 2018. The new subsidy cannot be paid to your service on your behalf if you do not take action.
With the new system the following will determine the subsidy level for individual families.
Combine Family Income:
• Under $65,710 = 85% subsidy
• Between, $65,710 & $170,710 = Gradually reducing to 50%
• $170,710 – $250,000 = 50% subsidy
• $250,000 – $340,000 = Gradually reducing to 20%
• And, $340,000 – $350,000 = 20% subsidy
• Over $350,000 = No subsidy
How much parents work
The activity test requires both parents to work, study or volunteer at least eight hours a fortnight.
In two parent families both parents, unless exempt, must meet the Activity Test. Assessment is based on the parent with the lowest number of hours of activity.
To be eligible for the maximum number of hours of subsidy which is 100 hours per fortnight, parents need to demonstrate 48 hours of ‘activity’ per fortnight.
Families earning less than $65,710 a year will be able to access 24 hours of subsided care per fortnight without having to meet the Activity Test.
Kind of care you use (day care, family day care, after school care)
For centre based day care, the maximum hourly rate cap is $11.55. For Family Day Care, the maximum hourly rate cap is $10.70. And, for Outside school care the maximum hourly rate cap is $10.10.
If your centre or carer charges less than this per hour, you will receive a subsidy based on the actual rate you are charged. If your centre or carer charges more than the maximum hourly rate cap for subsidy calculation, you will pay the gap out of pocket.
There was also a change in the cap on subsidies. There will be no cap on subsidies for families earning $185,710 and under. And $10,000 annual cap on subsidies for families earning more than $185,710.
With all these changes a lot of families will be affected especially families with income over $350,000 because they will no longer be entitled to a subsidy. On the good side, families with income less than $250,000 will be better off because they will be eligible for at least 50%.
If you need to discuss advice on how to prepare for the above changes please contact 02 4732 3844 or visit www.judgeaccountants.com.au.