Higher Child Care Subsidy and removal of annual cap

We’re making changes to the Child Care Subsidy (CCS). We’ll soon pay a higher subsidy to families with more than one child in care and remove the annual cap for all families who get CCS.

On this page:

Annual cap

Families earning more than $190,015 (2021–22 terms) have an annual subsidy cap of $10,655 per child each financial year.

From 10 December 2021 we’re removing the annual cap for all families who get CCS.

If a family has already reached the CCS annual cap before 10 December their CCS may have stopped. Services Australia will automatically reassess their CCS entitlement for this time. They will back pay CCS for affected sessions of care.

Families with more than one child in care

From 7 March 2022, families with children aged five or under in care will get a higher subsidy for their second child and younger children.

Who will be eligible?

Families may be eligible if they:

  • earn less than $354,305
  • have more than one child aged 5 or under in child care.

Who gets the higher subsidy?

Services Australia will work out which children get the higher subsidy by:

  • assessing all children in the family unit
  • identifying the standard rate child, and
  • identifying the higher rate children.

The standard rate child will get the standard CCS subsidy. Younger children will get a higher subsidy.

The standard rate child is usually the eldest child in the family unit. However, it could be another child depending on when children were enrolled in care.

How much will younger children get?

Eligible higher rate children will receive a 30% higher subsidy, up to a maximum 95%.

Families will continue to receive their income tested CCS rate for all children. Children eligible for the higher CCS rate will have the increase automatically included in their CCS percentage reported to services.

Payments align with the first CCS fortnight of the 2022–23 financial year.

Eligibility for the higher subsidy rate

If we believe there is no intention for a child to use child care we will end a child’s CCS eligibility. If a child starts to attend care again, a family can lodge a new claim for CCS.

From 7 March 2022, a child who has not attended care for 26 consecutive weeks will not be eligible for CCS.

If a standard rate child’s CCS eligibility ends, Services Australia will reassess all other children in the family unit to determine the new standard rate child and new subsidy rates.

Families should contact Services Australia if their circumstances change, especially if their standard rate child’s CCS eligibility ends.

How does the measure apply to combined families?

The measure will capture diverse family circumstances, including combined families where both parents are CCS-eligible for different children.

The Child Care Subsidy System is not able to recognise these combined families until July 2022. Services Australia will back pay the higher subsidy amount to affected families for the period March to July 2022.

Families concerned about this can discuss their situation with Services Australia who may be able to provide an alternative solution.

Additional Child Care Subsidy (ACCS)

Children who are entitled to both the higher CCS rate and Additional Child Care Subsidy (ACCS) will be paid the ACCS rate.

In Home Care

Sessions of In Home Care do not attract the higher subsidy for younger children. This is because In Home Care is subsidised on a family rather than per child basis.

However, children aged five or under in In Home Care are included in the family unit when determining the standard rate child.

A family with their standard rate child in In Home Care will get the higher subsidy for younger children who attend care.

What is a CCS fortnight?

A CCS fortnight is a two-week period that starts every second Monday. The first CCS fortnight for the 2021–22 financial year started on Monday 12 July 2021.

Generally, we calculate CCS at the start of a CCS fortnight. This amount continues for the whole fortnight regardless of any change of circumstance.

This means that if an eldest eligible child turns 6 partway through a CCS fortnight, younger children will keep the higher subsidy for the whole CCS fortnight.

What do families need to do?

Families already getting CCS don’t need to do anything. Services Australia will automatically increase the CCS for eligible second and younger children.

Families will be eligible for the higher rate from 7 March 2022.

For families new to CCS, a child must receive a session of care before they can be considered the standard rate child.

All CCS-eligible children aged five or under are counted in a family unit when determining the standard rate child, and the higher rate child/children.

For families with children born on the same date, Services Australia will automatically determine which child is the standard rate and apply the higher rate to other children.

What do services need to do?

Child care services don’t need to do anything to help families get the higher rate. Services Australia is working with software providers to implement the changes.