The Australian Government recognises certain state government subsidies to reduce out-of-pocket costs as 'third party' gap fee payments for child care subsidy purposes.
This enables these subsidies to be applied after Child Care Subsidy (CCS) has been deducted from a family's childcare fees.
The Australian Government recognises three kindergarten subsidies as a third party payment of gap fees:
- Kindy Plus subsidy
- Kindy Family Tax Benefit (FTB) subsidy
- Kindy base fee reduction subsidy.
Long day care services can deduct these subsidies from a family's fees after applying CCS. This arrangement will ensure that eligible families benefit from reduced out-of-pocket costs for the kindergarten program.
Note: You cannot claim these subsidies for a child who is eligible for the Additional Child Care Subsidy as this already covers the gap fee.
Examples
Kindy Plus Family
Nikki's child, Courtney, is 4 years old and is enrolled at the local long day care service for 3 days a week. Courtney attends day care for 30 hours each week, which includes 15 hours in the approved kindergarten program.
Nikki's circumstances:
- Eligible for the maximum rate of the CCS as her family income is below the threshold for the maximum subsidy rate of 85%.
- Eligible for 72 hours a fortnight subsidised care.
- Holds an Australian Government Health Care Card with the child named on the card (low income eligibility) and therefore is eligible for additional fee support from the Queensland Government through the Kindy Plus subsidy.
- The service charges $115 a day for a 10-hour session, which is $345 a week before subsidies are deducted. As this is below the CCS hourly rate cap (currently $12.74 per hour), the CCS covers 85 per cent of the cost.
The service is a Queensland Government-approved kindergarten program provider and receives Queensland Kindergarten Funding (QKF) subsidies to help offset the cost of providing a teacher-delivered kindergarten learning program.
Nikki is entitled to receive the Kindy Plus subsidy to ensure the family's out-of-pocket costs are not a barrier to Courtney benefitting from a kindergarten program.
Kindy Plus is deducted from her fees after CCS is applied. QKF Plus Kindy is a quarterly subsidy and must be passed on in
full to eligible families each quarter.
Example 1: Kindy Plus Subsidy
| Childcare fees | $345.00 | $17,940.00 |
| Less 95% of the child care subsidy (at 85% CCS rate) | $278.58 | $14,486.55 |
| Equals out-of-pocket cost (gap fee) | $66.41 | $3,453.84 |
| Less QKF Kindy Plus subsidy (third party gap fee payment)
b | $27.10 | $1,409.50 |
| Out-of-pocket cost | $39.31 | $2,044.12 |
| Refund of 5% CCS withheld in tax return
c | $14.67 | $762.84 |
| Net cost after refund | $24.64 | $1,281.28 |
Notes:
- Weekly and annual costs are based on a 52-weeks of care.
- Assumes QKF Kindy Plus is paid by the service equally over 52 weeks in a calendar year.
- Assumes the family receives a refund of the 5% withheld from CCS in their tax return at the end of the financial year.
Example 2: Kindy FTB subsidy and Base fee reduction
| Childcare fees | $345.00 | $17,940.00 |
| Less 95% of the child care subsidy (at 85% CCS rate) | $278.58 | $14,486.55 |
| Equals out-of-pocket cost (gap fee) | $66.41 | $3,453.84 |
| Less Kindy FTB subsidy (third party gap fee payment)
b | $9.61 | $500.00 |
| Less Kindy base fee reduction subsidy (third party gap fee payment)b | $14.42 | $750.00 |
| Out-of-pocket cost | $42.38 | $2,203.76 |
| Refund of 5% CCS withheld in tax return
c | $14.67 | $762.84 |
| Net cost after refund | $27.71 | $1,440.92 |
Notes:
- Weekly and annual costs are based on a 52-weeks of care.
- Assumes QKF Kindy FTB subsidy and base fee reduction is paid by the service equally over 52 weeks in a calendar year. The base fee reduction is illustrative and is set by the service.
- Assumes the family receives a refund of the 5% withheld from CCS in their tax return at the end of the financial year.