Child Care Benefit and Child Care Rebate
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.
Along with up-to-date tax return lodgement, 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.
Child Care Benefit
Benefits are available when caring for a child while you work, do training or undertake study – see the tests summarised below.
You can get the Child Care Benefit if you are a parent, relationship parent, foster parent or grandparent with a child in your care who is attending or receiving child care.
There are three main levels of federal government assistance for child care expenses:
- The Child Care Benefit – subject to an income test (approved care only) and based on standard hourly rates for approved child care services. Standard hourly rates are CPI-indexed annually in July.
Registered care is for work-related child care which can be provided by relatives, friends or – for example – schools or kindergartens for after school hours or occasional care. Not income tested. Claims are paid to you, and importantly you can’t get the Child Care Rebate (see below) for registered care.
Approved carers meet the higher government quality and operating requirements for approval and are able (at your option) to receive the Child Care Rebate directly from the government which reduces the burden on your cash flow. Income tested.
2. The Child Care Rebate – a reimbursement of 50% of out of pocket expenses (after Child Care Benefit and any JET payments) up to a maximum amount per child. Not income tested, but is subject to being eligibility for an approved Child Care Benefit.
3. Jobs, Education and Training (JET) Child Care Fee Assistance – an additional subsidy of the gap expenses incurred for parents who are already receiving the maximum Child Care Benefit , and who receive income support payments – including the Parenting Payment, Partner Allowance, Widow Allowance, Carer Payment, Widow B Pension, means tested ABSTUDY, Newstart Allowance, Youth Allowance (for job seekers, not full-time students), and certain CDEP and Employment Pathway Plan participants
Maximum Child Care Benefit Amounts
The value of the childcare rebate is 50% of out of pocket expenses up to a maximum of $7,613 per child from July 2017.
Rebate caps for earlier years are below. The cap was subsequently unindexed until 1 July 2017.
- Both the Child Care Rebate and Benefit can be paid to you fortnightly, quarterly, annually as a lump sum or direct to an approved child care service provider as a fee reduction.
- Qualifying out of pocket expenses are child care fees paid to an approved child care provider which are not covered by the government Child Care Benefit and after any JET payments. An approved child care provider is approved to receive the Child Care Benefit.
- To find out whether your child care is approved, you can check service providers at mychild.gov.au, or call 1800 670 305.
Work, training and study tests
For the Child Care Rebate – both you and your partner must have had work, training or study-related commitments at some time during a week or have an exemption. No minimum number of hours is required. See further: Child Care Rebate – Work, training and study tests
For the Child Care Benefit –
=>For registered care you and your partner must be working, training or studying or have an exemption to get up to 50 hours of Benefit per child per week. No minimum number of hours is required.
=> For approved care you can get up to 24 hours of Benefit per child per week. To get up to 50 hours you and your partner need to be working, training or studying for at least 15 hours per week (or 30 hours per fortnight) or have an exemption.
See further: Child Care Benefit – Work, training and study tests
Income Test for the Child Care Benefit
The approved child care benefit is subject to an income test (there is no assets test). The rebate formula takes into account your annual family ‘adjusted taxable income’. What ‘adjusted taxable income’ means is set out below. Benefits payable are reduced according to a tapering formula when family income is above the lower threshold.
For current income thresholds – see Department of Human Services – Income Test
1. Residency – to get the Child Care Benefit you or your partner must be an Australian citizen, a permanent resident living in Australia or be exempted from the residency requirements. From 1 July 2014, the length of time you can be paid Child Care Rebate while temporarily outside Australia will reduce from 3 years to 56 weeks.
2. Immunisation – Children under seven must meet the Government’s immunisation requirements or have an exemption. Along with up-to-date tax return lodgement, 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’ will be removed as an exemption category for Child Care Benefit, Child Care Rebate and the Family Tax Benefit Part A supplement.
3. Warning – salary sacrifice: To get the Child Care benefits you must be the person responsible for your child care costs. You should carefully check any salary packaging or other payment arrangements to ensure there are no unintended consequences, or get professional advice. Fahcsia policy states that if you salary-sacrifice an FBT-exempt child care cost, you would not be eligible for the Child Care Benefit because you haven’t incurred the legal obligation to pay the fees directly.
This article contains generalised information which does not address individual circumstances and therefore cannot be relied upon as the basis of entitlement or a course of action. There are a number of programs of assistance which are available in circumstances of special need, disability or disadvantage. Only the Department or Human Services can determine your entitlements. The Department of Human Services contact telephone number for information and claims is 136150, or online at www.humanservices.gov.au
This page was last modified 2017-11-15