This week saw the first sitting of parliament since the federal election. The Government didn’t waste any time and reintroduced* the legislation that will make the big changes to Child Care Benefit and Child Care Rebate – the Jobs for Families Child Care Package.

Originally, this package was meant to start on 1 July 2017, but in the Budget delivered in May 2016, its introduction was delayed by one year and will begin on 1 July 2018.

*(Reintroduced as it was introduced in December 2015, but not passed by the Senate, instead it was referred to an inquiry. This inquiry did actually recommend it be passed, but then parliament was dissolved for the election!)

What are the Changes to Child Care and how will it affect you?

Here is a reminder of what this package is going to offer:

1. The Childcare Benefit and Childcare Rebate will disappear and be replaced with one Childcare Subsidy.

2. It is means tested. Here are the combined family income rates:

 Combined Family Income Subsidy per cent of the actual fee charged (up to relevant percentage of the hourly fee cap)
Up to $65,710 85 per cent
More than $65,710 to below $170,710 Tapering to 50 per cent*
$170,710  to below $250,000 50 per cent
$250,000  to below $340,000 Tapering to 20 per cent*
$340,000  or more 20 per cent

*Subsidy tapers down by 1 per cent for each $3000 of family income

3. Notice that it is up to a percentage of an hourly fee cap – not a percentage of the actual rate you pay if your fees are higher than these rates. This is the same system as the current Childcare Benefit standard hourly rate. Currently at $4.30 an hour.

When the subsidy commences the hourly fee caps will be:

Service type Maximum hourly fee cap
Centre Based Long Day Care $11.55
Family Day Care $10.70
Outside School Hours Care $10.10

4. For families earning more than $185,710, an annual subsidy cap of $10,000 per child will apply, similar to the cap of $7,613 we have now.

5. All of these rates will be adjusted for CPI so when 1 July 2018 rolls around they will be slightly higher.

6. You need to be performing an ‘activity’ to be eligible for the Childcare Subsidy, this can include paid work, self employed work, unpaid work in a family business, looking for work, volunteering or studying. (I haven’t found any mention of unpaid maternity leave which is currently eligible for 12 months of Childcare Rebate.)

7. It is the number of hours of that ‘activity’ you perform that gives you a corresponding number of hours of Childcare Subsidy, the Activity Test is:

Hours of activity (per fortnight) Maximum number of hours of subsidy (per fortnight)
8 hours to 16 hours 36 hours
More than 16 hours to 48 hours 72 hours
More than 48 hours 100 hours

It looks like the Hours of Activity will relate to the parent with the lower number of hours. So if your family has a stay at home parent that works less than 8 hours, your family wont be able to access the new Childcare Subsidy.The exception is if your Combined Family Income is less than $65,710. Then you will be able to access 24 hours a fortnight.

Edit: The Bill was passed by the parliament on 9 February 2017. I have made minor updates to this blog post to reflect this and any other rate changes.

Lisa.

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