By Nicola Field
Nicola Field is a personal finance writer with 20 years of industry experience. A former chartered accountant, who holds a Master of Education degree, Nicola delivers expert, commonsense commentary as a regular contributor to Money Magazine and Canstar.
The Child Care Subsidy (CCS) is complex and often confusing, and this creates plenty of scope for families to miss out.
The good news is that six simple steps can help you make the most of the CCS.
1. Register early
If you’re planning to use child care for the first time in 2021, it pays to register for CCS early – preferably before your child starts in care.
Set up a myGov account, enrol in CCS, and when you find the provider that’s right for you and your child, give them a screenshot of your myGov page. This lets your provider know how much CCS you’re entitled to, and starts the ball rolling sooner.
The longer you delay, the more you could miss out – claims can only be backdated by a maximum of 28 days.
2. Confirm your income in time
If you are already receiving the CCS, you will need to confirm your family’s income for both the 2018-19 and 2019-20 financial years by 31 March, 2021. This can be done by either lodging a tax return or reporting your income to Services Australia.
If this is not done by the deadline, your CCS will stop, and you will be charged full fees until the task is sorted.
This is very much worth taking care of before 31 March, as it can have significant consquences on your financial situation should you need to pay full fees. Additionally, if you do complete the task after 31 March, you will have your CCS reinstated but not receive a repayment for that period of time in which you paid full fees.
3. Consider flexible hours
Be sure that you are only paying for care you use. Some child care centres are open 12 hours daily, but your child may only be in care from 8am to 4pm daily – that’s 80 hours each fortnight. Yet you could be billed for 120 hours.
As CCS only covers a maximum of 100 hours of care fortnightly, this can mean facing significant out of pocket costs for time you’re not using.
The solution can be to look for a care provider offering flexible hours. Headstart centres offer a choice of 9-hour, 10-hour or full day options. Picking the option that best matches the hours of care you use, can reduce your out of pocket costs, and still provide wiggle room to claim additional CCS hours if needed.
4. Watch the fee gap
Selecting the type of care and provider that’s best suited to your child is always a priority. However, it also pays to be mindful of fees.
While the CCS sets a maximum hourly rate of $12.20 for centre-based care, child care centres can charge more. When that happens, the difference comes straight out of your pocket.
It turns out, plenty of parents could be paying above the CCS cap. The latest figures from the Department of Education, Skills and Training show that in Sydney’s eastern and northern suburbs, up to 95% of child care centres charge an hourly rate above the cap. It’s a similar story in inner Melbourne, where up to 70% of centres charge more than $12.20 per hour.
This makes it important to shop around and compare the hourly fee charged by different centres. Looking for a provider with hourly fees at or below the CCS upper limit can mean pocketing valuable savings on the cost of care.
5. Rethink a pay rise
When you’re raising a family, a pay rise is always welcome. But it may not work in your favour if you’re sitting close to the CCS income thresholds.
Let’s say for instance, that Pete and Deb earn combined annual income of $69,300. At that rate, the family is entitled to have up to 85% of their child care costs subsidised. The catch is that their household income is just $91 shy of the next CCS income bracket, where the subsidy can fall to as little as 50% of their child care costs.
If this sounds like you, think about speaking with the boss about substituting a pay rise for non-monetary benefits.
According to recruitment firm Robert Half , 64% of companies have started offering new employee benefits in response to COVID, and the most popular options include employee wellness programs, additional paid leave, and flexible work hours. Having an extra week tacked onto your annual leave for instance, could be more valuable for you as a family than a salary uptick.
6. Include every hour of ‘approved activity’
Work, study, job hunting and volunteering are among the ‘approved activities’ eligible for subsidised child care. Don’t forget though, you may also be able to claim travel time as part of your CCS activities.
By way of example, let’s say Vicki has a toddler who attends child care four days each fortnight. The child care service is a 30-minute drive from Vicki’s workplace meaning she faces four hours of travel time each fortnight. That’s an extra four hours that Vicki can add to her approved activities each fortnight.
The key take out is that with some upfront planning, it can be possible to give your child the best of care, while also making the most of every saving the CCS has to offer.
Need assistance with working out how to maximise your Child Care Subsidy? Our Family Support Team is ready to help – contact them on 1800 314 517.
Alternatively, click here to find our Child Care Subsidy guide.
Please note that information provided in this article is general in nature and does not constitute financial advice. Before making any decisions, families should take into account their individual circumstances and consult with their professional advisors.