A helping hand: Child care benefit and rebate

Raising a family can be one of your toughest, but most rewarding experiences. The decision to return to work after a given period may be due to one or a culmination of many factors. For example:

• The child reaches a certain age and you have more free time

• You want to fulfil your career aspirations

• The added income to the household to help reduce debt, accumulate wealth and plan for retirement.

When you do decide to return to work, you may need to consider your options for child care.

In recognition of the costs associated with child care, the Government provides eligible families with financial assistance payments, such as the Child Care Benefit and Child Care Rebate.

Please note: From July 2018, the Child Care Benefit and Child Care Rebate will be replaced with a single Child Care Subsidy. Under the new system, families with an adjusted taxable income equal to or lower than $65,710 could receive a subsidy of 85% of the actual fee charged, up to an hourly fee cap. The subsidy will taper down as a family’s adjusted taxable income increases, reducing to nil at $350,000.

Child Care Benefit
The Child Care Benefit helps with the costs for approved or registered child care.

To be eligible for the Child Care Benefit, certain criteria apply. For example:

• Your child needs be attending approved or registered child care

• You need to ensure that your child meets the immunisation requirements

• You must be the person responsible for paying the child care costs

• You meet the residency requirements

• You must meet the income test (for approved care only).

The payment options for the Child Care Benefit can be:

• Fee reduction (approved care only). Paid directly to your chosen child care service provider to reduce the child care costs you pay throughout the year.

• Lump payment. You pay the full child care costs throughout the year and then lodge a claim at the end of the financial year to receive a lump sum payment.

To claim the Child Care Benefit, you will need to apply online or in person through Centrelink.

Approved Care
Approved care is where a child care service provider has been given approval from the Government to pass on the Child Care Benefit to eligible families.

Examples of approved care may include long day care, family day care, in-home care and occasional care to name a few.

If you intend on using an approved child care, the Child Care Benefit can generally assist with:

• Up to 24 hours per child per week for all eligible families, or

• Up to 50 hours per child per week if, for example, you and your partner are working, looking for work, training or studying for at least 15 hours per week or 30 hours per fortnight. You may also be eligible if you meet an exception.

For the 2017-18 financial year, the approved care rate for a non-school aged child is $4.30 per child per hour, or $215.00 per week. Whereas, for school aged children, the applicable payment rate is 85% of the non-school aged approved care rate.

It’s important to note that you may receive a different approved care rate depending on your circumstances. For example, the rate payable will depend on your household income, number of children attending child care (and, their hours of attendance), the type of child care service and any special circumstances that may apply.

In terms of the Child Care Benefit income test for approved care, the maximum rate is payable if your family’s adjusted taxable income is less than $45,114 per annum. However, you won't be entitled to any Child Care Benefit for approved care if your family’s adjusted taxable income is more than the following thresholds:

• One child and a household income greater than $156,914.

• Two children and a household income greater than $162,633.

• Three children or more and a household income greater than $183,655 (plus $34,724 for each child after the third).

Registered Care
Registered care is where individuals are registered with Centrelink as registered care providers.

Examples of registered care may include preschools, kindergartens, outside school hours care services or child care provided by grandparents/relatives/friends/nannies to name a few.

If you intend using a registered child care, you can receive the Child Care Benefit up to 50 hours per child per week if, for example, you and your partner are working (or looking for work), training or studying in the week that child care services are provided. You may also be eligible if you meet an exception.

For the 2017-18 financial year, the registered care rate for a non-school aged child is $0.719 per child per hour, or $35.95 per child per week. Whereas, for school aged children, the applicable payment rate is 85% of the non-school aged registered care rate.

It’s important to note that you don't need to meet an income test to qualify for the Child Care Benefit for registered child care.

Please note: Your Child Care Benefit may still be paid if you're charged for child care when your child is absent on a day that they would have usually attended. The annual limit of approved care is 42 absences per child per financial year; however, other conditions apply for occasional care. There is no absence limit for registered care.

Child Care Rebate
The Child Care Rebate is an additional payment to the Child Care Benefit, that helps with the costs for approved child care.

To be eligible for the Child Care Rebate, certain criteria needs to be met. For example:

• You child needs to be attending approved child care

• You claim and are eligible for the Child Care Benefit for approved child care, regardless of whether your income is over the income thresholds to receive a payment

• You and your partner are working (or looking for work), training or studying in the week that child care services are provided (unless you meet an exception)

• You need to ensure that your child meets the immunisation requirements

• You must be the person responsible for paying the child care costs

• You meet the residency requirements.

To claim the Child Care Rebate, you’ll need to first apply online or in person through Centrelink for the Child Care Benefit. During this process, you will automatically be assessed for the Child Care Rebate and payment will commence upon being deemed eligible.

The payment options for the Child Care Rebate can be:

• Fee reduction. Paid directly to your chosen child care service provider to reduce the child care costs you pay throughout the year.

• Paid to your nominated bank either fortnightly, quarterly or annually (if you opted for this option with your Child Care Benefit, then it will also apply to your Child Care Rebate).

For the 2017-18 financial year, the Child Care Rebate can assist with up to 50% of your out-of-pocket costs associated with child care, i.e. total child care fees less any Child Care Benefit payments and Jobs, Education and Training Child Care Fee Assistance received. This is capped at an annual limit of $7,613 per child.

It’s important to note that you don't need to meet an income test to qualify for the Child Care Rebate.

Please note: Your Child Care Rebate may still be paid if you're charged for child care when your child is absent on a day that they would have usually attended. The annual limit of approved care is 42 absences per child per financial year.

These Government financial assistance payments may help make the transition back to work easier for your household.

You may also find our article, ‘Parents returning to work’ useful, this runs through other things to consider when returning to work such as reviewing your personal insurances and your Will, as well as your superannuation.

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