The Australian Government is supporting families and maintaining the integrity of the child care system.
The Child Care Subsidy (CCS) was introduced on 2 July last year. In its first year of operation 1.13 million families received a Government-funded subsidy to support their child care costs.
Out-of-pocket costs for families are 7.9 per cent lower since the introduction of the subsidy and the Government will provide more than $8 billion for child care, this financial year.
As with other Government payments, at the end of the financial year, families that received the CCS go through a reconciliation process to ensure they have received the correct entitlement for the previous financial year. The process takes into account a family’s income and the hours of activity undertaken.
As a result of the reconciliation process, families will receive a top-up payment if they did not receive their full entitlement through the CCS. Likewise, if a family was paid too much CCS, that amount will be repaid. For example, a family would receive an overpayment if they have underestimated their annual income and as a result received more Child Care Subsidy than they were entitled to.
To help families avoid an overpayment, five per cent of CCS payments are automatically withheld throughout the year. This withheld amount can be used at balancing time to offset any overpayments. Families can request an increase to their withholding percentage, from five per cent up to 100 per cent, at any time, to provide a buffer to protect them from potential overpayments at the end of the financial year.
The latest balancing data, as at 4 October, shows that more than 574,000 families have had their balancing completed. Balancing work and issuing of outcomes will continue as more income assessments are provided by the Australian Tax Office.
Of the outcomes delivered to families, 87 per cent resulted in top-up payments or required no action by the families. 13 per cent were advised of a recoverable overpayment of their CCS entitlement. As at 4 October 2019, 24 people have requested a formal internal review of their CCS balancing outcome.
Having an overpayment does not affect eligibility for the CCS.
Child care fees increased by 53 per cent when Labor was last in government.