Child Care Costs For Families - Federal Budget 2008/2009
By Sandy Naidu | June 29, 2008
We have heard women with young kids complain many times that going back to work does not make financial sense - because almost everything you earn goes towards child care expenses. Federal Budget 2008-2009 seems to have addressed these womens’ needs. The budget has introduced changes to child care benefit and child care tax rebate scheme - changes that will reduce every family’s child care expenses.
Child Care Benefit
Previously once your income reached a certain level you only receive the minimum child care benefit. So everyone (irrespective of their income levels) was receiving some kind of child care benefit.
With the Federal Budget 2008 -2009 the ‘minimum rate‘ concept has been removed. The benefit will now reduce gradually until the benefit becomes zero. The amount of benefit you get depends on the family income and the number of children in approved care. So in effect with the new budget changes, the child care benefit is ‘means tested‘.
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Families with incomes above the following thresholds will now receive reduced child care benefit: * 1 child in approved care - approximately $111,000 * 2 children in approved care - approximately $119,000 * 3 children in approved care - approximately $135,000 |
Once the families reach the following income thresholds they will now receive no child care benefit:
* 1 child in approved care - approximately $126,000
* 2 children in approved care - approximately $131,000
* 3 children in approved care - approximately $148,000
So for high income earning families, the changes in child care benefit is not very helpful…They are going to be losing out completely and some are now going to get less than what they were previously getting. But child care tax rebate is much more positive towards these families. It is the combination of these two that is going to put more money into the pockets of working families (all levels of income earning families).
Child Care Tax Rebate
Previously you were getting 30% of your out of pocket expenses for child care back from the government. In the 2008-2009 Federal budget this figure has been increased to 50%, up to a maximum of $7,500 per child. This rebate is not means tested. You will receive this benefit even if you do not receive the child care benefit anymore. And here is another big change - You will now receive these payments from Family Assistance Office at the end of each quarter rather than at the end of the year.
So whilst some families might lose out on the child care benefit, they will get more than they previously did from child care tax rebate. So all in all this Federal Budget, as far as child care expenses goes, makes everyone a winner.
From my understanding all these changes are only for approved child care. You can get more information about the changes from - Family Assistance Office.
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