Child Care Subsidy (CCS) withholdings 007-17103126

Withholding some of a family’s entitlement to Child Care Subsidy before it is paid to child care providers is a way to reduce the likelihood of families incurring a debt at the end of a financial year. The process of withholding does not reduce a family’s overall entitlement to Child Care Subsidy.

5% of Child Care Subsidy will be withheld to reduce the likelihood that individuals will have a debt. This means that the full subsidy amount, minus 5%, is paid to providers on behalf of families following submission of session reports. Providers will be able to see the amount withheld on the payment advice they receive each fortnight. The amount withheld will be part of the gap fee that needs to be paid by parents to their child care provider.

There are no ongoing withholdings for Additional Child Care Subsidy (ACCS) payments.

Note: ‘N/A’ will display in the withholdings column of the CCS entitlement table in Process Direct if a customer is receiving:

• ACCS (grandparent)
• ACCS (temporary financial hardship, or
• ACCS (transition to work)

For ACCS (child wellbeing) customers, 5% will continue to display, even though there are no ongoing withholdings.

After the end of each financial year, the total entitlements and payments for each child will be reconciled against the customer’s (and any partner’s) actual income and activity for the year. If a customer received more than they were entitled to, the withholding amount will be used to offset the overpayment, so they do not have a debt (or have a reduced debt) to repay. If the customer received the correct amount of Child Care Subsidy, or received less subsidy than they were entitled to, amounts withheld during the year will be paid directly to them as a lump sum. This process of reviewing and recalculating entitlements for the full year is called Reconciliation.

The standard ongoing withholding amount for CCS which is applied at the initial claim is 5% of the subsidy amount. That is, 5% of the rate the customer is paid, not 5% of the hourly rate cap. Customers cannot ask for a different ongoing withholding percentage during the claim process, however they can ask to vary the ongoing withholding amount once their claim is finalised.

Customers can request a different ongoing withholding percentage at any time through the year. The preferred channel for customers to change their ongoing withholding percentage is through online services.

Staff can update a customer’s verbal request for a variation (increase or decrease) to their ongoing withholding percentage in Process Direct.

CCS ongoing withholdings are applied to reduce the likelihood of an overpayment at the end of the financial year. Through the year if a customer updates their income estimate that results in a reduced CCS rate it is important to also check if the customer would like to increase their ongoing withholding rate.

The customer can either request:

• an ongoing withholding rate increase from 5-100%
• an ongoing withholding rate decrease to 0%

Reasons for requesting a lower ongoing withholding percentage:

• Low risk of debt at reconciliation
• declaration of steady employment arrangement, work hours and income
• reported relevant change of circumstances (substantial decrease in estimated annual income)
• Other - Customer to provide reason for request

Reasons for requesting a higher ongoing withholding percentage:

• High risk of debt at reconciliation:
• declaration of unsteady employment, highly variable income
• reported relevant change of circumstances (substantial increase in estimated annual income)
• estimated combined annual income is around CCS income threshold that applies a taper
• Received notification that accumulated withholding was reduced or exhausted to offset an overpayment
• Other - Customer to provide reason for request

Customers who reduce their ongoing withholding rate are at an increased risk of having an overpayment at the end of the financial year when their payments are reconciled.

Customers who increase their ongoing withholding amount will reduce their likelihood of an overpayment at reconciliation however their child care centre will receive less Child Care Subsidy on their behalf. This will increase the child care fees that the customer is required to pay their service.

When requesting a change to the CCS ongoing withholding percentage customers must indicate the start date for the change – this cannot be a date in the past.

Customers have the option of providing an end date for the varied ongoing withholdings. Where an end-date is not specified in the initial request, the varied withholding amount will apply until the customer requests the ongoing withholdings to change. Customers are not able to retrospectively end date a varied withholdings request.

Customers who provide an end date will be notified 28 days before their requested ongoing withholding percentage is due to be changed back to the default 5%. They will be advised they can submit a new request for a different ongoing withholding percentage or if they take no action their ongoing withholding percentage will revert to the default five % on the date indicated.

The new ongoing withholding percentage will take effect from the next CCS Monday after the change.

The ongoing withholding percentage that applies is the one that is in effect when a service submits attendance information. For example, if a child attends a service every day of a week (Mon–Fri), a new ongoing withholding percentage is recorded on the Wednesday, and the service submits the session report for the child on the Friday, the new ongoing withholding percentage will apply to the whole payment, which is calculated for all sessions in the week (i.e. the old ongoing withholding percentage does not apply to the sessions of care delivered on the Monday and Tuesday).

Changes to CCS ongoing withholdings cannot be backdated for any reason.

A further standard 20% withholding is automatically applied, if the customer:

• has a child care related debt(s), and
• is only receiving CCS payments

The standard rate of recovery is 20% of the customer’s ongoing CCS entitlement. This may be weekly, or as session reports are received from their child care service. This amount will be automatically withheld from a customer’s ongoing CCS entitlement.

Customers can increase or decrease this debt recovery withholdings amount. Any decrease to the rate of 20% would require the customer to undertake an assessment for financial hardship. If a customer requests a change to the standard 20% CCS debt recovery rate or for information on viewing debt repayment withholdings from an ongoing CCS entitlement, see Recovering Child Care Subsidy (CCS) debts in Process Direct.

Where the standard 20% rate of debt recovery is applied to a customer’s CCS entitlement, the debt recovery withholdings are applied automatically. These customers do not need to enter into a voluntary arrangement.

When the standard 20% rate of withholdings is applied and the customer enters into a voluntary arrangement to repay their CCS debt, the standard 20% recovery will still be withheld from their ongoing CCS entitlement. The voluntary arrangement will be applied in addition to the standard 20% debt withholding rate.

Voluntary repayment arrangements for CCS debts do not prevent the 20% recovery rate for current CCS customers from being applied - see Child Care Subsidy (CCS) debts.

See Child Care Subsidy (CCS) debts for information on how to add a cash or voluntary repayment arrangements.