Child Care Subsidy Australia — How It Works, Rates and Eligibility
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Contents
The Child Care Subsidy (CCS) helps Australian families with the cost of approved childcare. The subsidy is paid directly to your childcare provider, reducing the “gap fee” you pay out of pocket. How much you receive depends on your family income, the hours of approved activity you do, and the type of care.
Key Facts
| Feature | Details |
|---|---|
| Maximum subsidy rate | 90% of fees (for incomes up to ~$80,000) |
| Minimum subsidy rate | 0% (for incomes above ~$533,000) |
| Activity test | Hours of care subsidised depend on hours of approved activity |
| Types of care | Centre Based Day Care (CBDC), Family Day Care (FDC), In Home Care (IHC), Outside School Hours Care (OSHC) |
| Annual cap | No annual cap for families earning under ~$80,000 |
| Paid to | Childcare provider directly (reduces your fee) |
How the CCS Rate Is Calculated
Your CCS rate is primarily based on your family’s combined annual income:
| Family income (FY2025–26) | Maximum CCS rate |
|---|---|
| Up to ~$80,000 | 90% |
| ~$80,000 – $530,000 | Tapers down from 90% |
| ~$530,000+ | 0% |
The rate reduces by 1% for every ~$4,000 of income above $80,000.
Example: A family earning $120,000 receives approximately 80% CCS. If their childcare fee is $150/day (5 days), the government pays 80% = $120/day. The family pays $30/day (“gap fee”).
Activity Test
The number of hours of subsidised care you can access per fortnight depends on how many hours of “recognised activity” each parent undertakes:
| Hours of recognised activity per fortnight | Subsidised hours per fortnight |
|---|---|
| 0 hours (at least one parent) | 24 hours (for exemptions/vulnerable families) |
| 8 – 16 hours | 36 hours |
| 17 – 48 hours | 72 hours |
| 49+ hours | 100 hours |
Recognised activities include:
- Paid employment (including leave)
- Self-employment
- Approved study or training
- Active job search
- Volunteering
- Disability or other approved circumstances
The lower-activity parent’s hours determine the subsidy hours for the family.
Exemptions from activity test
Families in the lowest income bracket (~$80,000 and under) can access 24 hours/fortnight without meeting the activity test.
Higher CCS for Subsequent Children
From July 2023, families with more than one child aged under 5 in care receive a higher CCS rate for subsequent children:
- Second and additional children under 5: CCS increases by 30 percentage points (up to 95% maximum)
- First child retains their standard CCS rate
- This is designed to address the “childcare cliff” where families with multiple children in care faced very high costs
Annual Cap
An annual cap on total CCS applies to higher-income families:
- Families with income above ~$80,000 are subject to an annual cap of $10,655 per child in care
- Families with income under $80,000 have no annual cap
Once the cap is reached, you pay full childcare fees for the rest of the financial year.
How to Claim
- Log into myGov → Centrelink
- Complete the CCS claim and provide your childcare provider’s name and your child’s details
- Centrelink assesses your eligibility and advises your provider of your subsidy rate
- The subsidy is applied automatically to your childcare bills — you only pay the gap
You do not need to re-apply each year, but you must confirm your income estimate and update Centrelink if your circumstances change.
FAQ
Does both parents’ income count toward CCS? Yes — combined family income is used to calculate the CCS rate.
What if my income changes during the year? CCS is calculated based on your estimated income for the financial year. If your actual income differs, it is reconciled at tax time — you may have a top-up or a debt.
Does CCS cover all types of childcare? CCS covers approved care types: centre-based daycare, family day care, in-home care, and outside school hours care (OSHC — before and after school, vacation care). It does not cover informal arrangements (e.g., a friend or family member).
Can grandparents or relatives receive CCS for looking after a child? Only if the grandparent or relative is using an approved childcare service. Informal family arrangements are not covered by CCS.
See also: Family Tax Benefit | Parental Leave Pay | Centrelink Payments Guide
For advice tailored to your situation, speak with a financial adviser via MoneySmart.