Currently, eligible families can receive the Child Care Subsidy to assist them with the costs of child care by reducing their out-of-pocket expenses, help individuals participate or increase their participation in the workforce, as well as support the early learning and development of children.
The rate of the subsidy can depend on several factors including the cost of care and whether it’s more expensive than a cap on fees, the hours of activity of the parent(s), and the family’s income.
The current rate of Child Care Subsidy a family can receive is based on their ‘family income’ as illustrated in the table below.
| Child Care Subsidy percentage* | |
|---|---|
| Current family income thresholds | Current percentage for 2022/23 |
| Up to $72,466 | 85% |
| $72,466 - $177,466 | 85% minus 1% every $3,000 of income > $72,466 |
| $177,466 - $256,756 | 50% |
| $256,756 - $346,756 | 50% minus 1% for every $3,000 of income > $256,756 |
| $346,756 - $356,756 | 20% |
| $356,756+ | 0% |
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* All income thresholds are based on 2022/23 thresholds and are indexed on 1 July.
As part of this measure, the Government will increase the Child Care Subsidy percentage for families from 1 July 2023. There will be an increase in the maximum subsidy percentage to 90% and it will progressively decrease until the family income reaches $530,000.
The new rate of Child Care Subsidy a family can receive is illustrated in the table below.
| Child Care Subsidy percentage* | |
|---|---|
| Proposed family income thresholds | Proposed percentage for 2023/24 |
| Up to $80,000 | 90% |
| $80,000 - $530,000 | 90% minus 1% every $5,000 of income > $80,000 |
| $530,000+ | 0% |
* All income thresholds are based on the proposed 2023/24 thresholds and are indexed on 1 July.
Rebecca, a single mother, has one child Sam (4) in centre-based day care for 4 days a week, for 10 hours a day at a cost of $11 per hour. Rebecca earns $100,000 for the year working 4 days a week.
Currently, her out-of-pocket cost of child care is $106.39 per week.
Under the proposed changes from 1 July 2023, her out-of-pocket costs will reduce to $61.60 per week, a saving of $45 per week.
For families with multiple children aged 5 or under, the subsidy received is currently worked out the same way for the first child, but differs for the second and subsequent children.
The current rate of Child Care Subsidy a family can receive for the second or subsequent child aged 5 or under is based on their ‘family income’ as illustrated in the table below.
| Child Care Subsidy percentage* | |
|---|---|
| Current family income thresholds | Current percentage for 2022/23 |
| Up to $72,466 | 95% |
| $72,466 - $177,466 | Lower of: 95% and 115% minus 1% every $3,000 of income > $72,466 |
| $177,466 - $256,756 | 80% |
| $256,756 - $346,756 | 80% minus 1% for every $3,000 of income > $256,756 |
| $346,756 - $356,756 | 50% |
| $356,756+ | 0% |
* All income thresholds are based on 2022/23 thresholds and are indexed on 1 July.
From 1 July 2023, the Child Care Subsidy a family can receive for the second and subsequent children aged 5 or under will be the greater of the new proposed table at the bottom of page one and the above table.
Ronald and Megan are a couple with two children Naomi (3) and Luke (5) in centre-based day care for 4 days a week, for 10 hours a day at a cost of $11.15 per child per hour.
Ronald earns $170,000 for the year and Megan earns $200,000.
Currently, their out-of-pocket cost of child care is $892 per week for both their children.
Under the proposed changes from 1 July 2023, their out-of-pocket costs will reduce to $606.56 per week, a saving of $285.44 per week.
This document has been prepared by BT, a part of Westpac Banking Corporation ABN 33 007 457 141 AFSL and Australian Credit Licence 233714 (Westpac) and is current as at 25 October 2022. The information in this document regarding taxation and legislative change is based on policy announcements which are yet to be passed as legislation and may be subject to future change. This information does not take into account your personal objectives, financial situation or needs and so you should consider its appropriateness, having regard to these factors before acting on it.