Tim and Amanda estimate they will earn $165,000 in 2018-19, so they will be eligible for 52 per cent of their childcare to be subsidised.

Tim works full time, and Amanda, who is the primary carer for their two young boys, works part time and studies, entitling them to 100 hours of subsidised care per child per fortnight.

Under the outgoing system, Tim and Amanda were eligible for a 50 per cent rebate on childcare, capped at $7,613 per child. Their subsidy cap usually ran out in January, meaning everything she earned – or more – was spent on childcare for about six months of the year.

Under the new system, because they earn under $186,958, their annual subsidy is uncapped so they can claim it all year – leaving them significantly better off.

Australian Childcare Alliance warns that around 25 per cent of families will find themselves in a worse position under the new system, such as families in which one partner is not working but who want to send their children to care for developmental reasons.

How does the new childcare subsidy work for you?

As of July 2, the system for childcare allowances in Australia changed. The current payments, the Child Care Benefit and the Child Care Rebate, will be abolished and replaced with the Child Care Subsidy, which will be means and eligibility tested, to help with the cost of approved childcare.

Most families will be better off – but some will be worse. What does it mean for you?

Calculating the subsidy yourself

Centrelink will need to know your family’s income, economic activity (as in, how much you and/or your partner work) and hourly rate of childcare.

Income

Your family’s combined income determines what percentage of your childcare is subsidised.

Family incomeChild Care Subsidy %
$66,95885%
$66,958 – $171, 958Subsidy reduces 1% for every $3,000 over $66,958
$171,958 – $251,24850%
$251,248 – $341,248Subsidy reduces 1% for every $3,000 over $251,248
$341,248 – $351,24820%
$351,248+Nil

Economic activity

The number of hours per fortnight the less “active” partner contributes to the Australian economy is used to determine how many of hours of subsidy per fortnight you are eligible for.

Activity can mean paid employment, study or training, volunteering, internships, or unpaid work in a family business, among other things.

Fortnightly activitySubsidised childcare
8 hours - 16 hours36 hours
16 hours - 48 hours72 hours
More than 48 hours100 hours

Benchmark fees

The government is setting a benchmark hourly fee for childcare, so you can claim your subsidy against whichever is lower of the benchmark fee or the hourly fee of your provider. Because the benchmark fee is federal, families in more expensive cities such as Sydney and Melbourne may find themselves paying more for childcare than their counterparts in other cities.

So where do you sit? Let us know in our comments section.