Confused about proposed changes to childcare? Here is the rebate breakdown

Despite much debate, very little has been locked down in terms of changes to childcare payments in Australia over the past five years. If you are feeling a little confused over exactly where you stand, you are not alone.

Prime Minister Malcolm Turnbull has now revealed details of exactly what changes he proposes under the long-awaited Jobs for Families Child Care Package.

Here is a breakdown of what the new structure will be if the Jobs for Families Child Care Package passes legislation.

Two become one

Under the new system, the government will combine the means tested Child Care Benefit and the non-means tested 50 per cent Child Care Rebate into a single payment called the Child Care Subsidy.

Fixed Government contribution

Instead of paying half the fees charged by childcare providers for families, the government will pay a fixed amount per hour of care.

Families earning around $65,000 or less will receive a subsidy of 85 per cent of their child care fees up to an hourly fee cap, which is currently set at $11.55 for Long Day Care, $10.70 for Family Day Care and $10.10 for Outside School Hours Care.

The subsidy gradually tapers to 50 per cent for families earning around $170,000 or more and continues to drop to around 20 per cent for those on incomes of more than $340,000.

Annual cap changes

Unlike the rebate, the new all-in-one subsidy will not include an annual cap for families earning less than $185,000. And, for those earning above that, the existing annual cap of $7500 will increase to $10,000.

The wait continues

While we finally have more details about the proposed package, parents still have more than a year to wait before any changes take effect.

The new Subsidy and Safety Net were previously announced in the 2015-16 Budget with an implementation date of July 3 this year, but that has since been extended until July 2, 2018.

And, once again, exactly what changes will be adopted will depend on what the government can get passed through parliament.

In the meantime, check out our recent post on 8 ways Centrelink changes will leave families out of pocket to help you prepare your finances.


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