By Amanda Fisher
Do you get frustrated trying to understand your child care entitlements?
Centrelink is a complex system and just about everyone agrees it’s confusing. In the last half of 2015 Centrelink complaints to the Ombudsman rose 24%. In the 12 months before that they rose 26%. If you’re frustrated, you’re clearly not on your own.
Fennell West is authorised to enquire, act, make changes and receive Centrelink correspondence on your behalf.
No one is expected to navigate Centrelink themselves and trying to can often lead to costly mistakes – especially when it comes to child care.
As a young mum, I often hear women say things like ‘I can’t go back to work because child care costs so much’. The argument made is that child care fees will swallow most of the money earned by going back to work. So what’s the point, right?
While the formulas used to calculate your child care entitlements are complex – part of the equation is really quite simple.
The Government will cover 50% of your out-of-pocket child care expenses – up to an annual limit of $7,500 per child and in addition to other child care assistance.
This Child Care Rebate is not income assessed. So, put simply, if you spend $3000 on child care the Government will pay $1500 and you’ll pay $1500.
If however your combined income entitles you to a percentage of additional Child Care Benefits – those benefits will be deducted before your 50% rebate is applied to your remaining out-of-pocket child care expenses.
These three case studies demonstrate how lower income households are entitled to a higher percentage of Child Care Benefits. Note, the remainder of the child care fees paid is split between the Child Care Rebate and the family.
Family 1
Combined income $52,000
Total Child Care fees paid $4,784
Child Care Benefit $3,034 (income assessed)
Child Care Rebate $875
Total out-of-pocket expenses $875
Family 2
Combined income $88,000
Total Child Care fees paid $15,851
Child Care Benefit $8,759 (income assessed)
Child Care Rebate $3,546
Total out-of-pocket expenses $3,546
Family 3
Combined income $110,000
Total Child Care fees paid $3,220
Child Care Benefit $0 (income assessed)
Child Care Rebate $1,600
Total out-of-pocket expenses $1,600
These real case studies serve to demonstrate that, if set up properly, child care fees should not be seen as an obstacle for people looking to return to work, or earn more.
Fennell West Operations Manager and working mum Amanda Fisher with children Leroy and Maddison.
Of course there are all sorts of other factors that need to be considered. Like your user history, whether you receive Family Tax Benefits A and B, whether your children are properly registered for child care and your estimated combined income.
Failing to properly set up your Centrelink account with the correct information can have a lasting impact on your personal cash flow.
It’s not uncommon to hear of people underestimating their income, collecting fortnightly benefits based on their estimated income, only to secure more work than expected, earn more, jump up a tax threshold and end up on a payment plan to repay the Government.
Don’t get caught out. We can take all the stress, forms and uncertainty away and help you make good decisions that maximise your financial position and help you achieve the work-life balance you’re looking for.
