1.2.7 Child Care Rebate (CCR) - Description

Introduction

This section briefly describes:

• CCR objectives,
• CCR eligibility requirements,
• CCR limits,
• how CCR is paid,
• CCR for individuals claiming CCB by fee reduction for 2008-09 onwards,
• CCR for individuals claiming lump sum CCB,
• payment arrangements of CCTR for 2006-07 and 2007-08,
• payment arrangements of CCTR for 2004-05 and 2005-06, and
• background information.

On 1 July 2009 CCTR was renamed CCR. The change of name is in recognition that the rebate is no longer a tax offset under taxation legislation but is paid to families under FA law by the FAO. There is no change to eligibility or entitlements.

CCR objectives

CCR aims to:

• assist families with the cost of approved child care,
• provide incentives for families with dependent children to participate in the community, and
• support parents in balancing work and family commitments.

CCR eligibility requirements

An individual may be eligible for CCR if the individual:

• used approved child care (1.1.A.90) during at least one week in the year,
• was eligible for CCB (entitled at a rate of zero or more), and
• the individual and partner (where applicable) met the CCR requirements of the work, training, study test for the week or, in the week, a weekly limit of hours applicable to the individual and the child was 50 hours, more than 50 hours or 24 hour care limit.

To satisfy the work, training, study test for the CCR an individual and partner (where applicable) only needs to have a work, or work related commitment at some point during the week (i.e. no minimum number of hours is required), or to have an exemption from this requirement.

Families who are eligible for CCB, but whose CCB entitlement is zero due to income may still be eligible for the CCR.

CCR is not available for registered care (1.1.R.20).

Act reference: FAAct section 57F Eligibility for CCR-for an income year or a period

Policy reference: FA Guide 2.6.3.10 Eligibility Requirements for Up to 50 Hours CCB, 2.6.3.20 Eligibility Requirements for More than 50 Hours CCB, 2.9 CCR Eligibility

CCR limits

The rate of CCR paid is 50% of out-of-pocket expenses for approved care up to the maximum limit. From July 2011 until 30 June 2014 the CCR maximum limit is $7,500 per recipient per child per year. The $7,500 limit applies to the income years 2011-12, 2012-13 and 2013-14. The first indexation of the $7,500 limit is to occur on 1 July 2014.

The following table shows the maximum limits for CCR.

How CCR is paid

Individuals can be paid their CCR (from July 2011) as a fortnightly payment of 50% of their out-of-pocket child care expenses for which they are liable, either directly to the individual's nominated bank account or to one or more approved child care service(s). Individuals may also still continue to receive their payment to a nominated bank account on a quarterly basis.

Individuals can be paid their CCR (from 2008-09) as either a quarterly or annual payment lump sum, unless they nominate to receive the fortnightly payment option, of 50% of their out-of-pocket child care expenses, for which they are liable. CCR will be paid into the individual's nominated bank account.

Act reference: FA(Admin)Act section 65EAAAA Individual may elect to have CCR paid in various ways, section 65EA Determination entitlement, or no entitlement, to CCR-eligibility for CCB by fee reduction, section 65EB Determining entitlement, or no entitlement, to CCR-eligibility for CCB for past period, section 65EC Later determinations of entitlement to CCR, section 65EAA Quarterly payments of CCR

CCR for individuals claiming CCB by fee reduction for 2008-09 onwards

From July 2011 the CCR can be paid on a fortnightly basis either directly to an individual's nominated bank account or to one or more approved child care service(s). Fortnightly payments will be paid once the FAO has received child care attendance details from approved child care service(s) and the CCB fee reductions have been calculated for the week (a more than nil amount or a nil amount due to income). For individuals in receipt of a nil amount of CCB, the full 50% CCR will be paid up to the annual cap. For individuals in receipt of a more than nil amount of CCB, the FAO will withhold a reduction amount of 15% to provide a reserve to minimise an individual's debt that may be determined after the end of the income year. The reserve withheld will be reconciled at the end of the financial year and any outstanding amounts will be paid to the individual.

From 2008-09 the CCR can be paid on a quarterly basis or as an annual lump sum payment. Quarterly payments will be paid once the FAO has received child care attendance details from approved child care service/s and CCB fee reductions have been calculated for the quarter (a more than nil amount or a nil amount due to income). The first 3 quarters will be paid based on an individual's CCB fee reduction amount, which is assessed using an estimate of income.

Payment of the last quarter of CCR will be 'held' until CCB reconciliation occurs. After the end of the income year, an individual's annual CCR entitlement will be determined after an individual's CCB entitlement is determined at reconciliation (when tax returns have been lodged and all child care usage/attendance information has been received). Any quarterly payments made throughout the year will then be deducted from this actual entitlement and any remaining CCR will be paid (including any quarters not paid) to the individual or a debt raised if the individual has received too much CCR throughout the year.

Act reference: FAAct section 57EAA Eligibility for CCR-for a week, section 57EA Eligibility for CCR-for a quarter, section 84A Amount of the CCR-for an income year, section 84AAA Amount of the CCR-for a week, section 84AAC Component of formula-reduction percentage

FA(Admin)Act section 65EAAAA Individual may elect to have CCR paid in various ways, section 65EAA Quarterly payment of CCR, section 65EA Determination of entitlements, or no entitlement, to CCR-eligibility for CCB by fee reduction, section 65EF Payment of CCR

CCR for individuals claiming lump sum CCB

Individuals who choose to claim their CCB as a lump sum payment can only receive their CCR as a lump sum payment after the end of the income year once their CCR eligibility is determined. This occurs after their lump sum claim for CCB has been determined.

Act reference: FA(Admin)Act section 65EA Determination of entitlements, or no entitlement, to CCR-eligibility for CCB by fee reduction, section 65EB Determination of entitlements, or no entitlement, to CCR-eligibility for CCB for past period

Payment arrangements of CCTR for 2006-07 & 2007-08

Individuals are paid their CCTR entitlement as a lump sum after the end of the income year for 30% of their out-of-pocket child care expenses, for which they are liable. After a usage statement has been provided by the approved child care service and the CCB entitlement has been determined, the CCTR entitlement will be determined and paid (if entitled) to the individual's nominated bank account.

Act reference: FA(Admin)Act section 65EA Determination of entitlements, or no entitlement, to CCR-eligibility for CCB by fee reduction, section 65EB Determination of entitlements, or no entitlement, to CCR-eligibility for CCB for past period

Payment arrangements of CCTR for 2004-05 & 2005-06

For the 2004-05 and 2005-06 income years the rebate is not a 'cash in hand' refund but rather a tax offset that reduces tax liability.

For child care costs incurred in 2004-05 and 2005-06 individuals need to claim CCTR as a tax offset through the tax system in their 2005-06 and 2006-07 tax returns respectively.

Act reference: Families, Community Services and Indigenous Affairs Legislative Amendments (Child Care and Other 2007 Budget Measures) Act 2007, refer to Schedule 1, item 23

Background information

The CCTR tax offset was introduced on 1 July 2004 for families and was administered by the ATO. Those with a tax liability could offset this to the value of 30% of their out-of-pocket child care costs up to $4,000 per recipient per child per year (indexed).

For the 2006-07 income year, and subsequent years, the CCTR was removed from the tax system to be delivered as a FA payment through the FAO. All eligible working families, even those with low or no tax liability could receive the rebate.

From July 2008 until 30 June 2009, the CCTR increased to 50% of out-of-pocket child care costs up to $7,500 (indexed) per child per year for approved child care.

From July 2009 until 30 June 2010, CCR entitlement is calculated as 50% of out-of-pocket child care costs up to a limit of $7,778 (indexed) per child per year for approved child care. For the 2009-10 income year, and subsequent years, the CCTR was renamed the CCR.

From July 2010 until 30 June 2011, CCR entitlement is calculated as 50% of out-of-pocket child care costs up to a limit of $7,941 (indexed) per child year for approved child care.

For the income years 2011-12, 2012-13, and 2013-14, CCR entitlement is calculated as 50% of out-of-pocket child care expenses up to a limit of $7,500 (capped) per child per year for approved child care. The annual indexation is paused for 3 income years. The first indexation of the $7,500 maximum limit is to occur on 1 July 2014.

For the 2011-12 income year and subsequent years, various payment options were introduced to better assist families meet the cost of child care. Eligible individuals may now choose from 4 of the CCR payment delivery methods to either:

• receive CCR payments directly to their bank accounts fortnightly, or
• have CCR payments made to their child care service fortnightly on their behalf, or
• continue to receive their CCR payment made to their bank account quarterly, or
• continue to receive their CCR payment paid annually as a lump sum payment.

The following table shows the maximum limits of CCTR.

The following table shows the maximum limits of CCR.

Act reference: FAAct section 84A Amount of the CCR rebate-for an income year, section 84F Component of each formula-CCR limit

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Last reviewed: 2 July 2012