For many Australian families, childcare fees can be a significant expense, taking a huge chunk of household income. This can make a necessity like childcare impossible to afford. Families can face upwards of a couple hundred dollars, to even over a thousand dollars per week. This is why the Australian government has put in place childcare subsidies, to support families in being able to afford an otherwise impossible necessity. How to apply for childcare subsides, and the finer details are not often common knowledge, but this information can become easily available.
What are Childcare Subsidies?
Childcare subsidies are a type of payment in which the Australian government pays directly to childcare providers to help families to minimise the total out of pocket costs of childcare. The Australian government recognises that early education and childcare is essential in the development of a child and because of this, agreed to make it more accessible. This subsidy is provided through Centrelink.
Who is Eligible?
When you begin looking into how to apply for childcare subsidies, there are a few requirements to determine whether or not somebody is eligible.
Residency
You (and your partner if you have one) must live in Australia and be a citizen/permanent resident. You may also be eligible if you hold a special category visa or some temporary visas. The Australian government can make exceptions if you are experiencing hardships or special circumstances.
Income Considerations
There is not one simple flat rate for Australian childcare subsidies, meaning the amount one household receives, may differ from the amount another household receives. This is determined by the total income of a household. The higher the total income is, the lower the subsidy, and the lower the total income is, the higher the subsidy will be. An example of this is if a household receives a combined income of $80k-$85k, they may receive up to 90% of their childcare fees covered.
Activity Test
To determine how many hours of subsidised childcare a household can receive, the government investigates how many hours your household works per fortnight. The more hours you work in approved activities, the more hours of subsidised childcare you can receive.
Some approved activities include:
· Paid work;
· Self-employment;
· Volunteer work;
· Actively looking for work; and
· Time traveled to and from work.
In saying this, there are also exemptions and safety nets that ensure childcare subsidies are accessible to more people.
Approved Childcare Services
To receive childcare subsidies, your child must receive care from an approved service.
This can include:
· Childcare centres;
· Family day care;
· Before/after school care (including school holiday programs); and
· Specific in-home care (must meet certain requirements)
The Australian government does not recognise babysitting/nanny services as approved childcare.
How to Apply for Childcare Subsidies – Step by Step
· Create a myGov account;
· Link Centrelink to your myGov account;
· Apply for the childcare subsidy through Centrelink;
· Enrol your child in an approved childcare providing service; and then
· Once approved and enrolment is confirmed, begin receiving the childcare subsidy.
How it Works
Childcare subsidies are not paid directly into your bank account or given to you as cash. Instead, the government ensures that the money you “receive” gets spent in the right places. Once you have confirmed enrolment at a particular service, the government will send the money directly to that service. This means you don’t actually see the money, you are simply left with lower childcare fees.
A gap fee is the left-over amount of money to be paid out of pocket by you after the childcare subsidies have been applied. For example, if a day at childcare costs $100 and the subsidies cover $80, the remaining $20 you would need to pay out of pocket are the gap fees. The childcare subsidies do not cover 100% of your fees, but they can cover a noticeable percentage based on your household income.
Payments don’t begin as soon as you are approved to receive subsidies. The government will wait until your child’s first day at childcare to ensure money does not get spent unnecessarily. If you are approved after your child has already begun childcare, the childcare subsidy can be backdated up to 28 days. If you would like more information regarding how to apply for childcare subsidies, please feel free to reach out to us here.