What does the New Child Care Package mean for my family?

What does the New Child Care Package mean for my family?

If you’re one of the millions of Australians who rely on childcare, it’s important to understand what the federal government’s New Child Care Package offers when it becomes effective on July 2 this year.

There are several key areas of the package which have been significantly overhauled by the government in a bid to provide greater relief to low- and middle-income families, who are deemed to have the greatest financial need.

The New Child Care Package is also likely to offer a fresh financial incentive to those families who may have a parent or carer considering weighing up whether to return to work, by providing a range of options that were not previously available to them.

And if your family is currently using childcare services, you would be encouraged to review your existing arrangement to see if it remains the most financially effective solution for your circumstances after the new package comes into effect.

Essentially, the New Child Care Package eliminates the current multi-payment system and replaces it with one central means-tested and employment-related structure. Key features include:

One new subsidy to replace the current childcare rebate and benefit structure

The new subsidy assessment test for families will be calculated based on three main elements related to each family’s individual circumstances. These are:

  • The combined family income
  • The work level of each parent
  • The type of childcare service being used

In terms of employment, both parents will have to work to satisfy the eligibility criteria and will need to be employed, study or volunteer for at least eight hours per fortnight.

If your work level does not meet the minimum hours, you can expect to receive 12 hours of child care if you earn less than $65,710. However, if your family income exceeds that figure and you don’t meet the work level criteria, you will not receive any subsidy.

Based on the calculation method for the new package, once you qualify for the level of work activity, the estimated subsidy amounts equate roughly to the following income figures:

  • Families earning $65,710 or less will have 85 per cent of childcare fees covered
  • The maximum subsidy amount decreases gradually down to 50 per cent once you’re earning $170,710 and remain around that level for those earning up to $250,000.
  • If you’re earning between $250,000 and $340,000, the subsidy reduces to around 20 per cent
  • If you are earning over $350,000, you will not be eligible for any subsidy

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Claim amounts are based on a set maximum hourly rate for different forms of childcare services

Under the New Child Care Package, the maximum subsidy you can claim for the childcare service you choose is based on the following hourly rates:

  • $11.55 for centre-based day care
  • $10.70 for family day care
  • $10.10 for outside school hours care

If you pay more than this through your childcare provider, you will have to financially cover the difference.

Changes to the annual cap

There will be no annual cap on subsidies for families with an income up to $185,710, but if your family is earning more than that, you will only be able to claim $10,000 per child.

Bonus subsidy for families with special identified needs

Under a newly introduced childcare safety net, there will be a bonus subsidy for those families who are determined to be disadvantaged, who may have children who are vulnerable or at risk of abuse and neglect; those experiencing temporary financial hardship; those from regional and remote communities; and for grandparent carers on welfare.

This allows those children to have access to education and childcare that may not ordinarily be available to them, and may potentially equate to childcare which is completely subsidised for full-time attendance of 50 hours per week.

Rules on method of payment and child eligibility

The new subsidy, officially called the Child Care Subsidy, will be paid directly to service providers so that it can be passed onto families as a fee reduction.

You can then make a co-contribution to your childcare fees and pay your provider the difference between their fee and the subsidy amount.

In terms of a child’s eligibility, there are some basic requirements which include:

  • The age of the child (must be 13 or under and not attending secondary school)
  • The child meeting immunisation requirements

The working members of the family must also meet the residency requirements.

For all families investigating whether they will qualify for childcare assistance under the new guidelines, and at what level, the government has a dedicated family Child Care Subsidy estimator. This will allow you to estimate your subsidy entitlement before existing arrangements change on July 2.

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Fact Checked -

This article was reviewed by Property & Personal Finance Writer Nick Bendel before it was published as part of RateCity's Fact Check process.

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Learn more about bank accounts

Can I open bank accounts for my children?

A common question for new parents is, ‘Can I open a bank account for my child?’

The short answer is yes – as a parent you can open a bank account for your child.

Once you’ve compared your options and found a bank account that suits your needs, the process is relatively simple.

As the bank account is for your child, you’ll need to provide some documentation such as proof of ID, including your tax file number.

You will also need a copy of your child’s birth certificate, and in some cases you may also need to sign a guarantee of indemnity.

Depending on the bank and whether you’re an existing customer, you may be able to open a bank account for your child online. However, you may still need to go into a branch to prove your identity.

How do I open a bank account for a child?

There are few better ways for a child to learn about money management than through savings. And there’s a plethora of bank accounts designed specifically for young people and children.

A bank account for a child can be opened online, over the phone or in a branch in a few easy steps. The minimum age a child can open a bank account for themselves usually ranges between 12 and 14.

If the child is too young to open the account, you can do it for them as their legal parent or guardian. 

To do this, you would need to be over 18, have an Australian residential address and currently reside in Australia (or have proof of residency).

You would also need to provide:

  • Identification for yourself and the child
  • Your tax file number (TFN) or TFN exemption

Depending on the bank account, you might be able to choose what level of access the child has to their bank account (online and via the phone).

How do I open a bank account for a baby?

If you’ve just welcome a new baby into the world, congratulations. Opening a bank account for your child can be a wonderful first gift.

Before you can open your child an account, you’ll need to have a birth certificate or passport for your baby.

As the parent or guardian, you’ll also be listed as a joint holder on the account. This means you’ll need to have proof of your identification and address (a driver’s licence, passport, birth certificate or Medicare Card).

Many banks and credit unions offer baby banks accounts. Usually, you can apply online; otherwise you can head into a local branch or office with your documents.

How do I open a new bank account?

There are a number of ways to open a new bank account – online, over the phone or in the branch. The trick is to decide what type of bank account you want beforehand.

It might sound like a simple enough task, but there are literally hundreds of bank accounts to choose from. And each offer their own banking features and benefits.

A comparison site like RateCity can help you work out what bank account product matches your needs.

Once you’ve made up your mind what you want, it’s advisable to have the following information ready for the application process.

  • A couple of forms of identification (such as driver’s licence, Medicare card, passport)
  • Tax file number
  • Residential address, contact phone number and email (though email is not essential)

What do you need to open bank accounts?

Opening a bank account is one of the simplest online tasks you could perform. The hard part is deciding which type of bank account you want to open.

All banking institutions have a website where you hit ‘apply’ on the account of your choice and step through an application in less than 10 minutes.

Here’s a list of information that is generally required for applications.

  • Identification (driver’s licence, passport, proof of age card, proof of citizenship and/or birth certificate)
  • Tax file number (so you don’t get charged the highest tax rate)
  • Address, contact email and phone number

If you decide to open a new account at the branch, make sure you ask beforehand what information you need to take with you, or take all of the above to be safe.

What do I need to open bank accounts online?

Opening a bank account online is a simple process and only takes between five to 10 minutes to complete. To get started you will need a computer or smartphone with internet access.

Information to have available when you’re ready to apply is:

  • Identification (such as driver’s licence, birth certificate, passport, proof-of-age card)
  • Tax file number
  • Residential address, email and a contact number

In some cases, you might be asked to provide employment details. If you’re not able to verify your identity online, most financial institutions let you provide this in the branch at a later date.

There are some types of bank account that you can apply for only in a branch. However, most bank accounts can be applied for conveniently online.

Can I set up a bank account online?

Most Australia-based lenders will allow you to set up a bank account online. Requirements vary from lender to lender, but you will probably need to provide a passport or birth certificate, as well as a driver’s licence, Medicare card or another form of secondary ID.

Can Centrelink access your bank account?

Yes, Centrelink can access your bank account, but only if you give them a reason to. Centrelink uses data-matching software with other federal government agencies to help it crack down on welfare cheats.

This is why it’s important to give true and matching information to all government agencies.

For example, if you report to Centrelink your annual income is $25,000, but at tax time you report your income as $50,000 with the ATO, it’s likely you’ll be ‘red flagged’.

At this point, Centrelink can legally request that your bank hand over your personal bank account details, to review your finances.

In most cases, Centrelink does not have the authority to take money out of your account. You will usually be given written notice to repay the debt.

However, Centrelink can also reduce your benefits until you’ve paid back what you owe. In extreme cases, Centrelink can garnish your wages and assets (including money in your bank account) until your debt is repaid.

How do you deposit change into your bank account?

One way to deposit change into your bank account is to visit a branch. Many lenders will also allow you to deposit your change through one of their ATMs.

Do I need to open a business bank account?

Just because you’re in business doesn’t necessarily mean you need a business bank account. You could be a sole trader not registered for GST, and use your personal bank account for business.

If you do want a business account, there are plenty of benefits attached to business transaction and savings accounts, as well as business term deposits.

There are business bank accounts designed for businesses with a high volume of transactions, and those for start-ups with a small amount of trade. You could also include an EFTPOS service with your account.

Some business bank accounts charge for the number of transactions per month, while others offer a pay-as-you-go fee structure, where you only pay fees for transactions you make.

It’s up to you whether your priority is mainly transactions, or earning the maximum amount of interest on your principal. There’s a business banking solution for you if you need one.

How do you set up a bank account online?

Once you’ve compared bank accounts and found the right one, the process of opening a bank account online is quite simple and can be done in around 10 minutes.

To set up a bank account online, you’ll need to prove your identity and provide an approved form of ID as well as your tax file number (TFN).

If you’re a new customer of the bank, you’ll need to verify your identity and potentially upload documents before you can complete your online application.

Once your ID has been verified and you’ve set up your bank account online, you should receive your bank cards in the mail along with your PIN and any other account details.

How do you change your account name on NAB banking?

Changing the name on your NAB bank account is straightforward, as long as you have the right documents.

If you’ve just got married, divorced or legally changed your name, here’s what you need:

  • Married – a marriage certificate
  • Divorced –your ‘decree nisi’
  • Legal name change –your legal name change certificate

You can take either the original document, or a certified copy, into a NAB branch, where it needs to be sighted by a bank employee and a copy taken.

Your NAB bank account name will be updated immediately. New debit, ATM and credit cards with your updated name will also need to be issued. These usually take between five to 10 working days to be posted out to you. Your existing cards will keep working until you activate your new ones.

If you haven’t legally changed your name, but just want to change your account nicknames, you can log onto NAB and do it through the Settings/Mailbox menu.

How long does it take to open a bank account?

The length of time it takes to open a bank account varies, depending on whether you want to open it online or in person.

Online

Most banks and credit unions have simple online applications that usually take no more than 10 minutes to fill out. It can be especially fast if you have your identification documents like your driver’s licence and passport handy. Sometimes you will instantly be approved and the bank account opened. However, depending on the financial institution, it may take a day or so to be processed and your account number issued. Your account information and ATM or debit card will then be mailed to you, which usually takes between five to 10 days.

In person

If you decide to go into a branch or office to open a bank account, it may take about half an hour. Make sure you bring your identification documents with you. Also book an appointment if you can, otherwise you might be forced to wait in line. Sometimes your ATM or debit card will be issued on the spot, otherwise you’ll need to wait for one to arrive by mail, which usually takes between five to 10 days.

Do you need a bank account to get a credit card?

To get a credit card, you need to show proof of income, which will almost certainly require you to have a bank account.