The amount of subsidy a person gets during the year is based on their family income estimate.
Child Care Subsidy started from 2 July 2018, so this is the first time this payment has been subject to a balancing or reconciliation process. However, the balancing process will be familiar to many families who get Family Tax Benefit or who were receiving the previous Child Care Benefit.
When Child Care Subsidy is balanced, the Department of Human Services compares the amount a person received during the financial year with what they were actually entitled to, based on their confirmed family income and circumstances.
There are different possible outcomes for balancing, depending on their situation.
If your client received too much subsidy during the financial year, they may have an overpayment they’ll need to repay. This can happen if they underestimated their family income or their circumstances changed, which means they received more subsidy during the year than they were entitled to.
If your client was overpaid, the Department of Human Services will use the amount that’s been withheld from their subsidy as a ‘buffer’ to reduce their overpayment.
If your client didn’t get enough subsidy during the financial year, they may get a top up when their subsidy is balanced. This will include the ‘buffer’ amount the Department of Human Services withheld during the year.
The Department of Human Services starts balancing Child Care Subsidy for the 2018-19 financial year once it has received information from your client’s child care provider, and they’ve confirmed their family’s income for the financial year.
To confirm your client’s family’s income, both partners will need to lodge tax returns with the Australian Taxation Office (ATO). Their income information will be sent to the Department of Human Services by the ATO, so it can balance their subsidy.
If your client doesn’t need to lodge a tax return, they will need to inform the Department of Human Services and confirm their family’s income with their Centrelink online account via myGov or the Express Plus Centrelink mobile app.
They must do this to enable the Department of Human Services to start balancing their Child Care Subsidy, even if they didn’t need to for their Family Tax Benefit to be balanced.
Once the Department of Human Services has the information it needs, it will balance their Child Care Subsidy.
There’s no need to call. Your client will get a letter when their subsidy has been balanced. They can also check if it’s been balanced with their Centrelink online account through myGov or the Express Plus Centrelink mobile app.
If your client is eligible for a top up payment, this will be paid into their bank account.
If they got more Child Care Subsidy than they were entitled to and need to pay this back, their letter will explain their repayment options.