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Ah, Centrelink. Famously the bane of any parent’s preschool experience. 3 hour wait times to talk to a robot or even worse be hung up on! Almost every year, the Government commits to expanding, changing or completely overhauling the CCS system, meaning another major headache for preschools and parents alike, leaving you wondering how much do I get, how do I apply, and who can I talk to for support? Fear not, here’s a comprehensive guide!
The Child Care Subsidy, or CCS as it’s often referred to, is the government’s rebate on education costs in the preschool years. Rather than having tax pay for school like public education, or funding going directly to the school or representative organisation like in the private education system, at the kindergarten level the Government funds the parents directly (well, kind of). Your subsidy will appear to you on your statement, lowering the amount that is owed to your preschool via a gap payment (the difference between your fee and CCS rebate). This subsidy is designed to make education more affordable, accessible and of a higher quality in the kindergarten years. There are a couple different types:
They’re not just making up hurdles for the sake of it (although it might feel like it sometimes), and there is a purpose to this. That being said, there are entirely different rules for subsidies that apply to at-home services (we’re not even going to go there).
Short, sharp and sweet, the government website has all the steps to get you started here: Services Australia Guide
In almost all examples, parents find they get less than anticipated in their calculations for CCS versus what comes out on their statement. You may already be aware that the government has brackets (similar to tax brackets) based on income that they use to means-test your subsidised level. The idea being that funds are attributed to lower income families enabling those with less advantaged upbringings to meet the same level as the rest of their cohorts. The rationale behind this comes from a long line of research on the effects of stress, lack of resources and support on lower income groups in society. Back on track, the brackets are as follows:
| Family income | Subsidy rate |
|---|---|
| Up to $80,000 | 90% |
| More than $80,000 to below $530,000 | Decreasing from 90%. The percentage decreases by 1% for every $5,000 of income a family earns |
| $530,000 or more | 0% |
So, if you earn $85,000 you receive 89%, $90,000 is 88% and so on so forth.
The rules are more complicated if you have 2 children because your subsidy increase to 95% for your second child if they’re under the age of 5.
The important thing to remember in all of this, and often the culprit of any perceived underpayments, is that the government holds an additional 5% in case of any variance during the year. This will get refunded to you at the end of the year in the case that everything went as expected. So, instead of 80%, you get 75% for the time being with the additional 5% in limbo until the end of the year.
Here’s the kicker – the Government subsidy isn’t based on the preschools advertised fees, it’s based on an arbitrary value that the government values preschool education at (which we believe is a whole lot less than what it should be, but that’s another whole article in itself!). What the CCS rate is valued at is determined and indexed every year. As of 2024, the rates are at:
| Age of education | Hourly rate cap |
|---|---|
| Kindergarten aged children and below | $13.73 |
| Pre-Primary aged children and above | $12.02 |
The activity hours system is based on your worked hours each fortnight. This system outputs a number of hours that the government will apply your subsidy to. Here are the different levels:
| Activity level each fortnight | Hours of subsidised care each fortnight |
|---|---|
| Less than 8 hours | 0 hours if you earn above $80,000 24 hours if you earn $80,000 or below |
| More than 8 to 16 hours | 36 hours |
| More than 16 to 48 hours | 72 hours |
| More than 48 hours | 100 hours |
In essence, the more you work the more hours you’re subsidised. There are additional pieces of information for people that need the extra support, are volunteering, or you’re receiving certain benefits so take a look here if that applies to you: Activity Levels
And now, for the moment you’ve all been waiting for, an example:
John is a 3 year old boy who’s parents receive a 70% rebate as a preschool that costs $160 per day ($15.24 per hour) for a 10.5 hour day. John’s parents receive 72 hours of subsidised education per fortnight and he attends for 63 hours per fortnight, so all hours are subsidised. As $15.24 is above the rate of $13.73 per hour, $1.51 per hour of this is unsubsidised and the 70% applies to $13.73. Minus the governments 5% withholding, the subsidised value comes to 65% of $13.73 per hour for the 64 hours John is in attendance (or, in this case, roughly $93 per 10.5 hours day).
If you’re in need of an example relative to your personal circumstances, the governments starting blocks Child Care Subsidy calculator can provide all the information you need: Don’t hate! Calculate.
There you have it! A little explanation and a go-to guide on the complicated world of Centrelink subsidies. And now, here’s 5 things you can do with your time rather than the 3 hour wait time for Centrelink: