How is the Child Care Subsidy calculated?
Child Care Subsidy is calculated from three things: your family's combined income, which sets your subsidy percentage; an hourly rate cap for the type of care you use; and the number of subsidised hours you can claim each fortnight. Services Australia pays the subsidy straight to your provider, who takes it off your fees. You pay the remaining gap.
A New Tax System (Family Assistance) Act 1999 (Cth)
Services Australia, Child Care Subsidy
Family Assistance Guide, 1.1.I.70 Income thresholds (CCS)
Department of Education, 3 Day Guarantee
Step one: your subsidy percentage
Your percentage is based on your family's estimated combined adjusted taxable income for the financial year. For 2026 to 2027, families earning up to $88,520 receive the maximum rate of 90 per cent. Above that, the percentage falls by one percentage point for every $5,000 of extra income, reaching zero at $538,520 or more. These thresholds are indexed each July, so check the current figures on the Services Australia website. Families with more than one child aged five or under in care may get a higher rate for the second and younger children, up to 95 per cent, provided family income is under a separate limit. The rules sit in the A New Tax System (Family Assistance) Act 1999.
Step two: the hourly rate cap
Your percentage is not applied to whatever the service charges. It is applied to the lower of the actual hourly fee and the hourly rate cap for that type of care. There are different caps for centre based day care, outside school hours care, family day care and in home care, and the cap for school aged children in centre based care is lower. If your provider charges more than the cap, you pay the full difference on top of your normal gap. The caps are indexed each year, so use the current figures published by Services Australia or the Department of Education rather than an old fee estimate.
Step three: subsidised hours
From 5 January 2026 the 3 Day Guarantee replaced the activity test. Every eligible family can receive at least 72 hours of subsidised care per fortnight, which is about three days a week. Families with more than 48 hours of recognised activity per fortnight, families with a valid exemption and families caring for a First Nations child can receive 100 hours per fortnight. The guarantee changes how many hours are subsidised, not your percentage. If you use more hours than your entitlement, the extra hours are charged at full fee.
Withholding, balancing and checking
Services Australia withholds a small portion of your subsidy during the year, currently five per cent, as a buffer against underestimated income. After you lodge your tax return, your entitlement is balanced against your actual income and any withheld amount is paid to you or used to cover an overpayment. Keep your income estimate up to date through myGov to avoid a debt. If your provider's statement does not match what you expected, ask for the session report and compare it with your Centrelink online account. The Family Assistance Guide published by the Department of Social Services explains each step of the calculation in detail.
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