The Child Care Payments system is changing on 2 July 2018 and I have to say it’s been a long time coming. The last time any change was made was in 2008!
Currently in 2017-18 we have the Childcare Benefit which is dependent on your income and the Childcare Rebate which in most cases is available to everyone who is working. These will both disappear and become the Child Care Subsidy.
It might seem that this new payment is a mix of both – and in some cases it is, but there are a few subtle things that you should be aware of going forward.
- The Subsidy is calculated on an hourly basis using information gathered over each fortnight. You will be asked to submit to Centrelink not just your annual income but the average number of hours you and your partner expect to work each fortnight.
- You need to be working
If your family is earning above $65,710, all parents need to work a minimum of eight hours a fortnight in order to receive the minimum Subsidy of 36 hours per fortnight. Working over 48 hours a fortnight then entitles you to over 100 hours a fortnight. Work could mean anything from employment, study, training or even unpaid work in a family business.
- It is means tested
The more that you earn as a family, the less Subsidy that you will receive per hour. If you earn between $65,710 and $170,710 then the percentage you receive per hour will be in the range of 85% decreasing to 50%. Families that earn over $350,000 won’t receive any Subsidy.
- The Rebate Cap will disappear – for some…
If your family earns less than $185,710 per year there will be no more maximum on the amount of Subsidy you can receive for the financial year. If your family earns above this then you will have a cap of $10,000 per financial year per child.
- There is a maximum per hour that you will receive
Sound a bit sneaky doesn’t it? But this was always the case for the Child Care Benefit. Even if you are entitled to a Subsidy amount of 85% of the hourly rate you pay, if that amount is higher than the governments hourly maximum, you will only receive the hourly maximum amount. Anything above that will be charged in full.
As with any change to a welfare system, there will be those who benefit and those who miss out. With the focus on the number of hours worked in a fortnight it suggests to me that the Government’s focus was always to encourage all parents to either return to the workforce or try and increase the number of hours they participate in work. Those that don’t work wont receive any Subsidy and may consider not using Child Care at all, even those who believe in its educational benefit.
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