2. The Child Care Subsidy replaces the Child Care Benefit and Rebate

On July 2, the Child Care Benefit and Rebate were replaced by a single payment, the Child Care Subsidy (CCS). The Child Care Subsidy (CCS) is now the payment through which working, studying or training parents can receive government subsidies to help pay for child care.

The Child Care Subsidy changes the way in which parents’ government support is calculated in significant ways. wealthdigital took a deep dive into these changes for subscribers in April and found that those paying higher rates for care, particularly where children are in care for fewer hours per week, may see a reduction in their entitlements.

Furthermore, the activity test under the CCS is generally more stringent than those used for the Child Care Benefit and Rebate. In situations where the primary carer has lower activity hours per week, the family may see their child care support drop, or disappear entirely.

Very high income earners will also see their benefits reduce significantly.

Overall, the CCS changes the goalposts for parents when deciding when to return to work and for how long. A sound understanding of the rules can make planners invaluable in clients’ decision-making processes.

The information contained in this publication is based on the understanding KeyInvest (ABN 74 087 649 474 AFSL No. 240667) has of the relevant Australian legislation as at the date shown in this publication.

The information contained in this publication is of a general nature only and is intended for use by financial advisers and other licensed professionals only. It must not be handed to clients for their keeping nor can any copies of sections of this publication be given to clients. KeyInvest is not a registered tax agent under the Tax Agent Services Act 2009. We recommend that your client be referred to their registered tax agent or legal adviser prior to implementing any recommendations that you may make based on the information contained in this publication.