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Are You Ready? The New Child Care Package is Coming

The New Australian Child Care Package Explained | Six Part Series

From July 2, 2018, a new child care package will be in place across Australia. There will be several major changes to child care operations, including a new Child Care Subsidy and the introduction of a new Child Care IT System. To help child care providers and families prepare for the change, we’ve put together a 6-part series to guide you through the transition.


Part 3 – The Child Care Subsidy 

What Families Need to Know

The New Child Care Package will introduce several changes for families of children in child care.

The Australian Government has invested $2.5-billion over four years to provide support for the 1.2 million families currently using approved child care services.

The aim of these changes is to simplify the government’s child care assistance program, and provide more support for more families, targeted to those who need it most.

One of the key changes is replacement of the current Child Care Benefit and Child Care Rebate payments with a single means-tested payment which will be paid direct to child care centres.

There will also be changes to the subsidy amounts families are eligible for, and categorisation of the child care service types available.


About the New Child Care Subsidy

The Child Care Benefit and Child Care Rebate payments will be replaced with a single Child Care Subsidy.

Families can continue to claim the Child Care Benefit (CCB) and the Child Care Rebate (CCR) until the new Australian Child Care Package commences on July 2, 2018.

No action needs to be taken until April 2018, when your family should receive a letter from

the Australian Department of Human Services outlining what the changes are and how you can claim the single means-tested Child Care Subsidy (CCS), which will replace both the CCB and CCR.

Under the new system, this payment will be paid directly to approved child care centres, instead of via Centrelink to families. The Subsidy will be passed onto families as a fee reduction.


Who can claim

Under the new rules, the CCS payment will be made to approved child care providers, as opposed to registered child care providers.

Approved child care providers are those forms of care approved by the Department of Education and Training.

Registered child care is care provided by individuals registered as a care provider with the department, including grandparents, other relatives, friends, neighbours, or nannies.

This means families will need to consider the most suitable child care arrangements for them, and make changes if required, to be eligible for the Child Care Subsidy.

Eligibility requirements also deem that a child must be 13 or under and not attending secondary school in order to qualify for the Subsidy.

Additionally, a child must meet immunisation requirements and the child’s parent/s must meet residency requirements.


What you need to know

Three factors will determine a family’s level of Child Care Subsidy.

Combined Family Income – total income of the family’s household

Activity Test – activity level of the parent/s

Service Type – type of child care service


Combined Family Income

You may be eligible for the Child Care Subsidy if you or your partner:

  • meet the eligibility requirements outlined above
  • are the primary carer or have legal responsibility for your child, or
  • are responsible for fees for care provided at an approved child care provider

Under the new Child Care Subsidy, households with a Combined Family Income of $65,710 or less will receive the largest subsidy of 85% of the actual child care fee. The subsidy then gradually decreases by 1% for every $3000 of combined family income.

The table below shows the percentage of child care fees that will be subsidised dependant on your combined family income.

To calculate your individual Child Care Subsidy, use the Family Child Care Subsidy Estimator.

Combined Family Income  Subsidy Rate
Up to $65,710 85%
$65,710-$170,710 Decreasing to 50%
$170,710-$250,000 50%
$250,000-$340,000 Decreasing to 20%
$340,000-$350,000 20%
$350,000+ 0%



Child Care Subsidy Annual Cap

Families with a Combined Family Income below $185,710 per year will not be subject to a cap on the amount of Child Care Subsidy they receive. Families earning between $185,710 and $350,000 will have an annual cap which will increase to $10,000 per year, per child.


Activity Test

The number of hours of child care that will be subsidised for each child will depend on the number of hours the child’s parent/s spend at work, or in other approved activities, per fortnight.

Work, study, training, and some other activities including volunteering, or unpaid work in a family business are recognised as approved activities.

A range of activities can also be combined as part of the Activity Test, which allows families subsidised access to up to 100 hours of child care.

            Hours of Activity                                     Max no. of hours subsidised per child            

1            8 to 16 hours                                                 36 hours

2            More than 16 hours to 48 hours               72 hours

3            More than 48 hours                                    100 hours

*Per fortnight



Families with a Total Combined Income of $65,710 or less per year who do not meet the Activity Test requirements, will still be able to access 24 hours of subsidised care per child, per fortnight, as part of the Child Care Safety Net.


Service Type

Under the new Child Care Package, the categories of child care service types will change.

  • Long Day Care (LDC) and Occasional Care (OCC) services will become Centre-based Day Care (CDC) services.
  • Before School, After School and Vacation Care services will become Outside School Hours Care (OSHC) services.
  • There will be no change to Family Day Care (FDC) services.
  • A new service type will be created to combine In Home Care (IHC) services and the current Nanny Pilot Programme.

When the Child Care Subsidy comes into effect on July 1, 2018, an hourly rate cap will apply for the different service types. This includes:


Service type                                      Maximum Hourly Rate Cap

Centre Based Day Care                        $11.55

Family Day Care                                    $10.70

Out of Hours School Care                    $10.10


Additional Support

Extra support will be available to those families who most need it, under the Child Care Safety Net, worth $1.2 billion.

This is a vital aspect of the new child care package and includes the Activity Test Exemption for low-income households, Additional Child Care Subsidy, Community Child Care Fund and Inclusion Support Programme.

There are four parts to the Additional Child Care Subsidy.


Child Wellbeing

Designed to assist families with circumstances requiring practical help to support a child’s safety and wellbeing. Eligible families will receive a 100% Subsidy rate and up to 120% of the Child Care Subsidy hourly rate cap, for up to 100 hours per fortnight. The family will not have to meet the Activity Test.



Grandparents can also receive a 100% Subsidy and up to 120% of the Child Care Subsidy hourly rate cap for up to 100 hours per fortnight if they:

  • recieve income support, and
  • are the principal carer of the child in care with 65% or greater carer responsibilities,
  • And have substantial autonomy for the day-to-day decisions about the child’s care, welfare and development

These grandparents will not have to meet Activity Test requirements.


Temporary Financial Hardship

Higher short-term child care fee assistance will be available for families experiencing significant financial stress due to exceptional circumstances, for up to 13 weeks.

Eligible families will receive a 100% Subsidy and up to 120% of the Child Care Subsidy hourly rate cap, for up to 100 hours per fortnight. The family will not have to meet Activity Test requirements.


Transition to Work

Support will be available for families transitioning to work from income support by engaging in work, study or training activities.

To be eligible for Transition to Work, families need to receive:

  • Parenting Payment
  • Newstart Allowance
  • Disability Support Pension
  • Youth Allowance
  • Another payment prescribed by the Minister’s rules, or
  • Have a Job Plan in effect

Transition to Work provides a subsidy of 95% of the actual fee charged and up to 95% of the Child Care Subsidy hourly rate cap. Hours of assistance will be determined by the Child Care Subsidy Activity Test.



Resources for Families

New Child Care Package – Information resources for families

Key Changes for Families Factsheet

Family Child Care Subsidy Estimator

New Child Care Package Powerpoint Presentation

New Child Care Package – Frequently Asked Question

Additional Child Care Subsidy


About the Author – Mark Woodland

Mark Woodland is the founder & CEO of Xplor, a multi-platform childcare software system for the education sector. He founded Xplor 2015, after working in his mother’s Melbourne childcare centre and serving in the Australian Army.

While working in his mum’s childcare centre, he was frustrated with the outdated systems and level of admin. He took a “very small problem” and came up with a very big solution to revolutionise the childcare sector. Woodland went on to open two more early learning centres in Melbourne.

Mark was awarded EY Entrepreneur of the Year in 2017 and is included in KPMG’s top 20 Australian Twitter power list.

You can follow him here @MarkAWoodland

Website –


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