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New Childcare Subsidy

The current Child Care Benefit (CCB) and Child Care Rebate (CCR) are slated to be removed and replaced with a new Child Care Subsidy (CCS). If the Bill goes through parliament as currently written, these changes are due to take effect from 1 July 2018.

These changes may affect millions of individual taxpayers, including anyone who currently uses approved childcare or after school care for their dependent children. Social security benefits such as child care benefits are no exception.

The table below provides a list of the current rules and their respective changes.

 

Current rules Proposed rules
Maximum rate of CCB $4.24 per hour

– 100% for family ATI under $44,457

– Above $44,457 rate is reduced by adjustment percentage, being:

CCB% × Schooling% × Part-time%

– Incomes above $66,000 get reduced by sliding percentage between 10% and 35%

– School age children reduced by 15%

– Addbacks allowed for additional children

Maximum rate of CCS $11.55 per hour

– 85% for combined ATI under $65,710

– 85-50% for combined ATI $65,711 to $170,710

– 50% for combined ATI $170,711 to $250,000

– 50-20% for combined ATI $250,001 to $340,000

– 20% for combined ATI $340,001 to $350,000

– 0% for combined ATI above $350,001

In sliding scales reduce by 1% for every $3,000

Income levels where CCB is phased out completely. Annual CCS limit of $10,000 per child per year in effect for family’s with ATI above $185,710.
No of children in care Income limit for year
One $154,697
Two $160,308
Three $181,024
Each additional child $34,237
To meet activity test of 15 hours per week, care can be claimed between 24 to 50 hours per week. Hours of activity for both parents combined and required to meet the threshold of 48 hours per week to claim for 100% of CCS entitlement.
Child care rebate (CCR). 50% out-of-pocket expenses (after CCB taken out) up to a maximum of $7,500 per child per year. No longer available as merged into increased rates of CCS above.
No equivalent, except for grandparents. Additional child care subsidy.

Child care safety net payments for children under “child wellbeing”, “temporary financial hardship”, “transition to work” and “grandparent” situations.

CCB paid either as a lump sum at the end of financial year or to childcare provider as reduced fees.

CCR paid directly to bank account on quarterly basis (elections can be made for other payments).

All CCS paid directly to childcare provider. In limited circumstances CCS can be paid to parents.

Opportunities

There is no limit on child care subsidy for family’s with ATI below $185,710. As the proposed legislation is due to take effect from 1 July 2018, an opportunity may exist for bringing forward income into an earlier income year to get under this threshold (such as capital gains).