Incoming Childcare Subsidy Changes for 2022

It’s not often you get to talk about benefits being brought forward, but the new Childcare Subsidy changes are very welcome for so many Australian families and luckily for all of us, will be implemented ahead of schedule.

Earlier this year, the government passed changes in the federal budget to cut the cost of childcare for working families with a focus on getting women specifically, back into the workforce. This was set for July 2022 but has been fast tracked and should be in play from March 2022, 3 month early!

One of the common questions we receive from our clients, is whether it’s actually worth returning to work when you have multiple kids in childcare especially when you are only working part time. Even with the subsidies available, the cost of childcare can certainly be substantial and is one of the biggest deterrents of going back to work in the early years.

So today I thought I’d break it down for you, so you know what to expect and more importantly, what you need to do.

What’s changing?

For families with 2 or more children in childcare under 5 years old, you will be eligible to receive an additional 30% on top of the current subsidy rate. This additional subsidy is not applied to your first child, but any additional children.

So for example, if your first child has the current subsidy rate of 50%, your second child will receive a subsidy rate of 80%. That’s a massive difference! Your first child will still have the existing 50% subsidy, the additional benefit is only applied to additional children.

The subsidy cap for any additional children is 95%, but that’s still a huge benefit change for those with multiple kids.

The second change, is that the annual cap will finish up in December 2021, which is earlier than expected. This is retrospective, meaning that any family who has reached the cap before December may have some of their out of pocket expenses refunded by the government. Double win.

Who is eligible?

To be eligible for this, you need to have 2 or more children, aged 5 years or under, in childcare at the same time.

You also need to have a household income of less than $353,680 pa. This is still means tested and you will be required to update your CCS family income online as usual.

Who doesn’t this impact?

For anyone who has 1 child in childcare, the normal subsidy rates apply. So if you are on a 50% subsidy rate, then that will stay as is.

What does this mean?

The idea of this is to make it more affordable for families who have multiple young children in childcare, to help promote women returning to work. It’s estimated to impact 250,000 Australian families.

So for the average Australian, it works out to be about $2,200 better off a year. Not bad.

For lower income families specifically, the benefit is even bigger.

What do you need to do to get it?

For those who have their children in childcare who are already getting the CCS, then you don’t really need to do anything. You will get an automatic increase for any eligible additional children once March rolls around. This should reflect in your out of pocket costs to the childcare facility from that point forward.

If you are new to the CCS system, it will be automatically applied after March 2022 to you for any additional children who enter childcare after the date.

Our view?

We know how difficult those early years can be for our clients, so any additional relief is very welcome. This may mean it’s more viable for some people to go back to work earlier or at a higher rate if it means that your childcare costs will be reduced going forward so for families with more than 1 child under 5, there is no downside here.