by lisa levison

September 4, 2016

Changes to Child Care

The Government introduced Jobs for Families Child Care Package on 2 July 2018. It was one of the biggest changes in many years to the Child Care funding system and replaced the old Child Care Benefit and Child Care Rebate with the new Child Care Subsidy.

This post has been updated to include the latest rates and information as at 1 July 2020.

The following is a summary of the changes that was written before their introduction. I update this post every year with the new child care subsidy rates to ensure that it is still relevant. If you would like further explanation then you can download the free Child Care Subsidy Solution eBook using the details at the bottom of the this post. 

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 Child Care Subsidy.

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

Combined family income^Subsidy rate*
Up to $69,39085%
Over $69,390  to under $174,390Gradually reducing to 50%
$174,390  to under $253,68050%
$253,680  to under $343,680Gradually reducing to 20%
$343,680  to under $353,68020%
$353,680  or more0%

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 oldChildcare Benefit standard hourly rate. *Subsidy tapers down by 1 per cent for each $3000 of family income

When the subsidy commences the child care subsidy hourly rate cap will be:

Service type Maximum hourly fee cap
Centre Based Long Day Care$12.20
Family Day Care$11.30
Outside School Hours Care$10.67

4. For families earning more than $189,390, an annual child care subsidy cap of $10,560 per child will apply.

5. All of these rates will be adjusted for CPI so when 1 July rolls around each year 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. 

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

Hours of activity (per fortnight) Maximum number of hours of subsidy (per fortnight)
8 hours to 16 hours36 hours
More than 16 hours to 48 hours72 hours
More than 48 hours100 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 $69,390. Then you will be able to access 24 hours a fortnight.

If you want more detailed information on the childcare subsidy activity test, including what the activities are you can find that here. This includes child care subsidy unpaid maternity leave. 

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.


p.s. If you want detailed information on the items listed above, then download the Childcare Subsidy Solution and work out ways that you can increase and decrease your Subsidy based on the amount that you earn and work.



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