Everything you need to know about the new Australian Child Care Subsidy and how it affects single parents.

By now you are probably aware, the Australian Government is making some major changes to the child care benefits in Australia. Say goodbye to the Child Care Rebate (CCR) and the Child Care Benefit (CCB), and hello to the Child Care Subsidy. #hi ? . The Child Care Subsidy, which is replacing both the CCR and CCB, will commence on the 2nd July 2018. Let’s see how the new child care subsidy affects single parents.

What you need to know.

The amount of Child Care Subsidy you will receive will depend on three things:

1. Combined Family Income (i.e your income)

The percentage of subsidy you are eligible is based on your annual adjusted taxable income.

If you earn:

less than $66,958, you are eligible to receive 85% of the subsidy;
between $66,959 – $171,958, you are eligible to receive between 85 – 50% of the subsidy;
between $171,959 – $251,248, you are eligible to receive 50% of the subsidy;
between $251,249 – $341,248, you are eligible to receive between 50 – 20% of the subsidy;
between $341,249 – $351, 248, you are eligible to receive 20% of the subsidy; and
more than $351,249, you miss out on any subsidy.

2. The Activity Test

The number of hours of subsidised care is based on the number of hours of activity you do.

Activity is defined as one of the following.

Paid work.
Study and training.
Unpaid work in a family business.
Looking for work.
Volunteering.
Self-employment.

If you undertake between 8 – 16 hours of activity a fortnight, you are eligible to a maximum of 36 hours of subsidy per child per fortnight. Those that do between 16 – 48 hours of activity a fortnight, are eligible to a maximum of 72 hours of subsidy per child per fortnight. And if you have more than 48 hours of activity a fortnight, you are eligible to a maximum of 100 hours of subsidy per child per fortnight.

Note: these hours of activity do not need to coincide with the child care hours used. In addition, travel time to and from the child care service to work is also included.

An exemption is if you earn less than $66,958 a year and do not meet the activity test, you will be able to access 24 hours of subsided care per child per fortnight, as part of the Child Care Safety Net.

3. The type of child care service

The maximum hourly rate the Government will subsidise is based on the type of child care service.

The maximum hourly rate caps are:

$11.77 per child for a centre based day care (long day care and occasional care),
$10.90 per child for a family day care,
$10.29 per child for outside of school hours care (i.e. before and after school care and vacation care), and
$25.48 per family for in home care.

Important!

You MUST MUST MUST complete the online Child Care Subsidy assessment using your Centrelink online account through myGov before the 2nd July 2018. So don’t forget to get onto that. If you don’t, you will not continue to receive government subsidies on your fees. Argh!

You will need to provide details on the above three items. Keep an eye out as all families will be contacted by Centrelink this month with more information on how to apply.

Other things to note.

Families earning $186,958 or less will have no cap on the amount of Child Care Subsidy they can claim.
For families earning between $186,958 – $351,248 there is an increase in the current cap of $7,613 to $10,190 per child, per year.
The Child Care Subsidy is only applicable if you have children aged 13 and under.
Payments in the new system will be made directly to service providers, which are then passed on to families. This differs from the current system where there are multiple payment options.

Additional Child Care Subsidy.

The Additional Child Care Subsidy replaces a number of existing payments including the Special Child Care Benefit and the Jobs, Education and Training Child Care Fee Assistance. It is included in the Child Care Safety Net and is designed to give some families extra assistance with the cost of approved child care. Those families include:

families who require practical help to support their children’s safety and well-being,
grandparents who are primary carers,
families experiencing temporary financial hardship, and
families transitioning from income support to work.

It will, in most cases, cover all of a child’s child care fees.

How will this affect single parents?

This new child care subsidy, although sometimes advertised as the “simplified” childcare support policy, is quite complex. It will affect different households differently. However, if you are a single parent earning less than $171,958 there’s a good chance you’ll be better off than the current system if you have kids who are not yet in school. There is also no longer a cap for those earning $186,958 or less which means no more running out of CCR.

Hai Anh La and Jinjing Li of The Institute for Governance and Policy Analysis (IGPA) at the University of Canberra describe how the new child care subsidy affects single parents.

The impacts on a full-time working, single parent with a non-school aged child.

“Full-time working, single parents with non-school-aged children will become better off regardless of their income level below $320,000 where the child care subsidy under the new scheme reaches the CCR cap. However, those in the middle-income group benefit the most from the new policy: an increase of up to 23% of fees subsidised for families earning around $168,000 per year, compared with a 14.5% increase for those on the low income. This is largely due to the taper design of the CCB, where the benefit starts to drop before the family has an income of $50,000. Additionally, the lower income single parent households may be exempted from the income test as they could receive Centrelink payment such as Parenting Payment Single. The taper threshold for the new child care subsidy is set a higher value of $65,710.”

If you’re a visual kind of person, they also provide this helpful graph which shows the impacts of the new system on this type of family unit, and also how it differs from the current system.

Source: Hai Anh La and Jinjing Li of The Institute for Governance and Policy Analysis (IGPA) at the University of Canberra

The impacts on a full-time working, single parent with a school aged child.

For a full-time working, single parent with a school aged child, they outline the following impacts.

“Single parents working full-time receive a higher child care subsidy if their income is below $170,710. Beyond this income threshold, 50% of the fee is covered, equal to the CCR rate without any CCB based on the existing policy. Again, a more generous subsidy increase goes to families earning average income: an increase of up to 27% of fee subsidised for families on around $90,000 per year, compared with a climb by 13.5% for those on the low income.”

Again, this is illustrated in the graphs below.

Estimate what you will receive.

To prepare for these changes, budget it in, and compare what you will receive with the new system compared to the current system, use the Family Child Care Subsidy Estimator.

P.S DID YOU KNOW?

You can also book one-on-one coaching with Julia Hasche from wherever you are in the world!

Have you just parted ways with your partner, and feeling lost?
Have you been single for a little while now and need assistance with getting your life back on track and feeling empowered?

Click HERE to read about coaching and to hear from some others who have gone through coaching programs with Julia, and book in here for your 30-minute complimentary Clarity Call.

The purpose of the Clarity Call is:

For me to get to know you and understand an overview of your current situation and where you are at.
For us to establish what you need assistance with to move forward.
To see if we are both comfortable working together.