Child Care Subsidies
A tax concession for child care expenses started life as a tax offset in the 2006 financial year, but has since been converted to a direct payment which is handled by the Family Assistance Office, now the Department of Human Services.
Whilst it is no longer a tax system benefit, payment of the child care benefit is still linked to the tax system to the extent that lodgement of your tax return and (where applicable) an income assessment is part of the eligibility and approval processes.
New child care package from 2 July 2018
The government has introduced legislation to reform the various existing child care measures. Key aspects of the new system will include:
- the cessation of Child Care Benefit and Child Care Rebate, to be replaced with a Child Care Subsidy, paid direct to service providers.
- Subsidy caps based on family income
- Subsidy rates based on income
- An activity test with limited exemptions determines the number of subsidised hours which can be accessed. Eligible activities include work, training (including leave and looking for work), relevant training and education
- Dept of Education and Training – New Child Care Package – information resources for families
- Human Services – Child Care Subsidy
- Education.gov.au – New child care package
- Minister’s Media Release
Along with up-to-date tax return lodgment, and applicable to children under 7, payment is subject to immunisation (or an approved exemption recorded in the Australian Childhood Immunisation Register), before 30 June.
From 1 January 2016, ‘conscientious objection’ is removed as an exemption category for Child Care Benefit, Child Care Rebate and the Family Tax Benefit Part A supplement, and the immunisation requirements extended to children of all ages. See Social Services Legislation Amendment (No Jab, No Pay) Bill 2015.
Both the Child Care Benefit and Child Care Rebate are tax free.
‘No jab, No pay’ policy
The ‘No jab, No pay’ vaccination requirements provide for child care fee assistance to be removed for each child who does not meet immunisation requirements.
This affects all children under the age of 20.
Compliance with the vaccination requirements is associated with eligibility for Family Tax Benefit Part A and child care fee assistance.
See further policy and requirements here.
Change to Adjusted Taxable Income Formula
The government has adjusted the formula for the inclusion of the value of fringe benefits in Adjusted Taxable Income.
The meaning of ‘adjusted fringe benefits total’ is modified so that the gross value rather than adjusted net value (previously 51%) of reportable fringe benefits is used, except for PBIs, hospitals and charities.
‘adjusted fringe benefits total’ is a component of Adjusted Taxable Income
This affects eligibility for:
family tax benefits, stillborn baby payment,child care benefit, Youth Allowance, Abstudy and Isolated Children’s Allowance
parental leave pay and dad and partner pay
net medical expenses offset
dependant (invalid and carer) (DICTO) tax offset
Notional dependent’s offset for the Zone & overseas personnel tax offsets
For details of the amending legislation see Budget Savings (Omnibus) Act 2016 (Schedule 15). The measures take effect from 1 January 2017 for family assistance payments and for income tax tests from 1 July 2017.
Budget News 3 May 2016
From the 2016-16 budget, acknowledgment the government’s time frame for the Child Care overhaul announced last year has slipped: “The new Child Care Subsidy, Community Child Care Fund and the Additional Child Care Subsidy will now commence on 1 July 2018. To fund this child care package, the Government is restructuring Family Tax Benefit payments to provide more targeted assistance to families to encourage workforce participation.” (See: budget.gov.au)
News 30 November 2015
From July 2017, grandparents on income support who are the primary carer of their grandchildren will be able to access subsidised child care under the new Child Care Safety Net. Funding for grandparents who care for their grandchildren more than 65% of the time is to be based on the actual hourly fee capped at 120% of the new Child Care Subsidy. See Government Media Release
This page was last modified 2019-01-03