Although it can be difficult to raise a family these days, it is often an extremely rewarding experience. However, your decision to return to work after being off for any length of time could be due to one or more different factors. For instance:
- You have more available time because of the fact that your child has reached a certain age
- You are keen to fulfill your predetermined career aspirations
- You aim to use the additional income to reduce your household’s debt load, build wealth and plan ahead for retirement
When returning to work, you will need to take your options into account with regards to childcare. The Government has acknowledged that there are high costs associated with most forms of childcare, and as a result, it provides qualifying families various forms of financial assistance payments, including the Child Care Rebate and the Child Care Benefit.
It is important to keep in mind that as of July 2018, the Child Care Rebate and the Child Care Benefit will be replaced with the single Child Care Subsidy. Under this new system, families who have an adjusted income that is equivalent to or less than $65,710 could obtain a subsidy of 85% of the actual fees charged, up to a predetermined hourly fee cap. As a family’s adjusted taxable income rises over time, the subsidy will reduce and effectively reach zero at the $350,000 mark.
Child Care Benefit
This specific benefit provides assistance to parents or caregivers with regards to the costs of registered or approved childcare.
Predetermined criteria apply before families can be deemed eligible to receive these benefits:
- You must ensure that your child meets all of the immunization requirements
- Your child has to be attending a registered or approved childcare facility
- You have to be the party responsible for paying the childcare expenses
- You must meet the predetermined residency requirements
- You have to meet the income test (only for approved care)
Payment options for the Child Care Benefit can include:
- Lump sum payment. This will involve you paying all childcare costs throughout the year and lodging a claim at financial year end for the costs you have paid during that year
- Fee reduction (only for approved care). This will be paid directly to your chosen childcare provider to help reduce your childcare expenses that you pay during the year
In order to claim your Child Care Benefit, it will be necessary for you to apply in person either online or at your local Centrelink branch.
This is where a provider of childcare services has been granted Government approval to pass the Childcare Benefit on to qualifying families. Examples of approved care can include family day care, long day care, occasional care and in-home care to mention a few.
If you are going to be using an approved childcare facility, you will normally be able to obtain assistance by means of the Child Care Benefit with the following:
- Up to 24 hours per week for all families who qualify
- Up to 50 hours per child each week if, for instance, you and your spouse are working, seeking employment, studying or training for a minimum of 15 hours per week or 30 hours per fortnight. You could also qualify if you meet an exception
The approved care rate for a non-school aged child is $4.30 per child per hour, or $215.00 per week for the 2017 – 2018 financial year. However, for children of school-going age, the applicable payment rate is 85% of the non-school aged rate for approved care.
It is essential to keep in mind that you could obtain a different approved care rate depending on your specific circumstances. For instance, the payable rate will be determined according to your household income, amount of children who attend daycare (and the amount of hours they attend), the type of childcare services and any other unusual circumstances that could apply.
With regards to the Child Care benefit income test that is required for approved care, the maximum rate will be payable if your family’s adjusted taxable income is under $45,114 per year. However, you will not qualify to receive any Child Care benefit for approved care if your family’s adjusted taxable income is higher than the thresholds mentioned below:
- One child as an combined household income of more than $156,914
- Two children and a combined household income that is higher than $162,633
- Three or more children and a combined household income of more than $183,655 (plus an additional $34,724 for each child after the third)
This is where individuals have been registered as official care providers with Centrelink. Examples of registered care can include kindergartens, preschools, outside school hours care services or even childcare that is being provided by relatives, grandparents, nannies or friends.
If you are considering using a registered form of child care, you could obtain the Child Care Benefit for up to 50 hours per child per week if, for instance, you and your spouse are working or looking for employment, studying or training during the week that the child care services are provided. You could also be eligible if you meet a predetermined exception.
The registered care rate for a child of non-school age is $0.719 per child per hour, or $35.95 per week per child for the 2017 – 2018 financial year. However, the applicable payment rate is 85% of the non-school aged registered care rate for children who are of school age. It is essential to remember that you will not need to meet an income test to qualify for the Child Care benefit for registered childcare options.
You will also need to keep in mind that your Child Care benefit could still be paid if you are billed for childcare if your child happens to be absent on a day that they would ordinarily have been at their regular care facility. The yearly limit of approved care is 42 absences per financial year per child. However, other conditions may apply with regards to occasional care, and there is also no absence limit for registered care.
Child Care Rebate
This payment is provided in addition to the Child Care benefit, and it provides assistance with regards to covering the cost of approved childcare.
Predetermined criteria must be met to qualify for the Child Care rebate, including:
- Your child must be attending approved childcare
- You claim and qualify for the Child care Benefit for approved childcare, regardless of if your income exceeds the income thresholds to obtain a payment
- You and your partner currently work or are seeking employment, studying or training during the week that childcare services are being provided (unless you meet an exception)
- Your child must meet all of the immunisation requirements
- You have to be the person who is paying the childcare expenses
- You will have to meet residency requirements
If you would like to claim the Child Care Rebate, you will have to either apply online or in person at a Centrelink office for the Child Care Benefit. Throughout the process, you will automatically be assessed to determine whether you qualify for the Child Care Rebate and payment will begin once you have been found to qualify.
Payment options for the Child Care Rebate can include:
- Reduction in fees. Paid straight to your chosen childcare provider to lessen your childcare expenses that you pay during the year
- Paid into your chosen bank account bi-weekly, quarterly or yearly. If you chose this option with your Child Care Benefit, it will apply to your Child Care Rebate as well
During the 2017 – 2018 financial year, the Child Care Rebate could help with up to 50% of your out-of-pocket expenses associated with childcare – in other words, your total childcare fees minus any Child Care benefit payments and Jobs, Education and Training Child Care Fee Assistance you may have received. This will however be capped at a yearly limit of $7,613 per child. You will not need to meet an income test to determine if you qualify for the Child Care Rebate.
It is important to remember that your Child Care Rebate could still be paid if you are billed for childcare when your child does not attend childcare on a day that they would ordinarily have attended. The yearly limit of approved care is currently 42 absences annually per child.
The above-mentioned Government financial assistance payments could help make it easier for your household to make the transition back into the working world.