Child Care Subsidy withholding, what does this mean?

At the end of each financial year, Services Australia will balance a family's child care subsidy based on their tax return for the year.

Most families will have a withholding percentage on their entitlement (5% is the default amount, but families can change this in their MyGov account up to twice per year).

If a family receives too much child care subsidy, the withholdings that have been set aside will reduce what they owe at the end of the financial year. 

Lean more about withholding CCS

Lean more about Child Care Subsidy Balancing

All families who get Child Care Subsidy must confirm their income after the end of each financial year. Services Australia will compare a family’s actual income against the estimate provided earlier. This process is known as balancing and it is how the Australian Government ensures families get the correct amount of Child Care Subsidy. Families who didn’t get enough CCS may get a top up payment. Families who received too much may get a debt.

Most families simply confirm their income by lodging their tax return with the Australian Taxation Office or ATO. Parents who don’t need to lodge a tax return can confirm their income by telling Services Australia they don’t need to lodge one. They can do this through their Centrelink online account or the Express Plus Centrelink mobile app. And they’ll need to tell Services Australia even if they’ve already told the ATO they don’t need to lodge.

Families have one year to confirm their income. If they don’t confirm their income within 12 months after the end of a financial year they’ll lose their CCS payments. This means you’ll need to charge them full fees. Services Australia can restart their CCS but only after the family has confirmed its income. CCS will not be backdated and will only be paid from the CCS Monday after the family has confirmed its income. Families who still haven’t confirmed their income two years after a financial year ends may have to repay any CCS received for that financial year. They will also no longer be eligible for CCS. They’ll need to make a new claim if they wish to get CCS again. And they can only do this once they’ve confirmed their income and repaid any outstanding CCS debt or entered into a repayment arrangement. Families who miss the second deadline will also miss out on any top up of CCS for which they may have been eligible.

The balancing process is a matter between families and Services Australia but as child care providers and services you can help. We have resources on our website to help families understand the process. You might like to share these with families or display them at your service. But you aren’t expected to answer questions families have about balancing. If families at your service want more information direct them to the Services Australia website.