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Changes to Childcare Payments

Last week the Government passed it controversial changes to Childcare payments in the Senate.

This has a significant impact on many working parents (and therefore businesses) in Australia and has been designed to make child care more affordable and accessible for low income families.

What’s changed:

  • The $7,500 annual rebate cap will be removed for families that earn up to $185,000 per year
  • Those earning more than $185,000 per year will be able to claim $10,000 per child
  • Families earning over $350,000 per year will not receive any childcare subsidies
  • Freeze on Family Tax Benefit A and B payments for two years

The new Childcare package will mean a family that earns less than $65,000 will have 85 per cent of their child care bills covered.

The Government predicts that that 816,000 families will be better off under these changes.

Both parents will have to work, volunteer or study for at least 8 hours a fortnight to be entitled to these payments.

There has been some argument over whether it’s fair as families that don’t meet the work and study test will only receive 12 hours of subsidised care, instead of the 24 hours of subsidised care, which they are entitled to now. High income earners are also commenting that they are inclined to work less so that they don’t hit their cap, meaning less tax being paid by high income earners. So, time will only tell if the new measures are effective.

The new changes will come into effect on July 2, 2018.

We hope that these changes enable more workers the ability to work and not be restricted by the rising cost of childcare.

Written by resident HR Guru Jessy Warn

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