Child Care Subsidy (CCS): A Guide for Victorian Families (2026)

Who Qualifies for the Child Care Subsidy?

CCS is a federal payment administered by Services Australia. It applies equally across all states, including Victoria. To be eligible, you must meet all of the following conditions.

Your child must be 13 years old or younger and not attending secondary school. Exceptions apply in some circumstances, and the age rule is the one families most often get wrong, so it is set out in full in the next section. Your child must be enrolled at an approved child care service (long day care, family day care, outside school hours care, or in-home care). Your child must meet the Australian Childhood Immunisation Register requirements.

You (or your partner) must care for the child at least 2 nights per fortnight, or have at least 14% care responsibility. You must be liable for the childcare fees charged by the provider. You must meet Australian residency rules (Australian citizen, permanent resident, or certain visa holders).

You do not need to be working or studying to qualify in 2026. The old activity test, which previously required parents to demonstrate paid work, study, or volunteering to access more than a minimal number of subsidised hours, was replaced by the 3 Day Guarantee from 5 January 2026. Every eligible family now gets at least 72 subsidised hours per fortnight as a baseline.

If you're unsure whether your child's service is approved, you can search for approved providers on the Department of Education's website.

What Age Does Child Care Subsidy Stop?

CCS is tied to your child's age and to their schooling, not to the type of care you use. Your child must be 13 years old or younger and not attending secondary school. Once either of those stops being true, CCS stops.

The two conditions work together, and the schooling one usually bites first. A 12-year-old who has started secondary school is generally not eligible, even though they are under 13. A 13-year-old still in primary school generally is. Eligibility ends at whichever condition fails first, so for most families the subsidy runs out when the child starts Year 7, not on their 13th birthday.

There is an exception for older children who need supervision. If your child does attend secondary school, you may still be eligible where your child needs supervision because of a disability, where exceptional circumstances apply, and where no adult is available to care for them during that time. Services Australia asks for evidence of the disability and assesses these case by case, so contact them directly rather than assuming you are ineligible.

For school-aged children who are still eligible, CCS applies to outside school hours care (before school, after school and vacation care) as well as to long day care. The hourly rate cap for outside school hours care is lower than the centre-based day care cap, so check the current figure for your care type at Services Australia.

The age rule is separate from every other part of the subsidy. Meeting it does not by itself qualify you: you also need the residency, immunisation and care-responsibility conditions in the section above, and your income still sets your subsidy percentage.

How Much Child Care Subsidy Will You Receive?

The subsidy is calculated as a percentage of your childcare fees, up to a government-set hourly rate cap. Three factors determine your final amount: your family income, the number of children you have in care, and the type of care you use.

The CCS percentage is applied to whichever is lower: your actual hourly fee, or the government's hourly rate cap. For centre-based day care, the rate cap is currently $15.19 per hour for children below school age (2026-27; checked 31 July 2026). Families with a combined income up to $88,520 receive 90% CCS. The percentage decreases by 1% for every $5,000 above $88,520, reducing to 0% at $538,520 or more. Rates were updated 6 July 2026 in line with CPI.

If you have more than one child aged 5 or younger in care at the same time, you may be entitled to a higher CCS rate for one or more of those children. This is applied automatically by Services Australia when you have multiple children enrolled.

The rate cap varies depending on the type of approved care your child attends. For centre-based day care it is $15.19 per hour. Outside school hours care, family day care and in-home care each have their own, lower hourly rate caps — check the current figure for your care type at Services Australia. If your centre charges more than the rate cap per hour, you pay the difference out of pocket. This is sometimes called the "gap fee."

How CCS Is Calculated

Your CCS entitlement is worked out in steps:

1. Your combined family income determines your CCS percentage. For 2026–27, families earning under $88,520 receive 90%. The rate reduces by 1% for every $5,000 above that, reaching 0% at $538,520.

2. The hourly fee or the hourly rate cap, whichever is lower, is what the subsidy percentage is applied to. For centre-based day care, the current rate cap is $15.19 per hour. If your centre charges more than this, you pay the difference (the gap fee) regardless of your subsidy rate.

3. Your subsidised hours are determined by your participation level. From 5 January 2026, all CCS-eligible families receive a minimum of 72 hours per fortnight under the 3 Day Guarantee, with up to 100 hours available for families with higher participation levels.

4. Multiple children under 5 may attract a higher subsidy rate. Where a family has more than one child aged 5 or under in care at the same time, the second and younger children can receive a higher subsidy rate; the income limits are set and indexed each year by Services Australia.

Here's a worked example for a Melbourne family paying $150 per day for a 10-hour session at a long day care centre, with a combined household income of $100,000. Hourly fee: $150 ÷ 10 hours = $15.00/hr. The 2026-27 rate cap of $15.19 is higher than the $15.00 hourly fee, so CCS is calculated on the actual $15.00/hr fee, not the cap. Income of $100,000 sits $11,480 above the $88,520 threshold, so subtract approximately 3% from 90% = 87% CCS. Hourly subsidy: $15.00 × 87% = $13.05. Daily subsidy (10 hrs): $13.05 × 10 = $130.50 per day. Out-of-pocket gap fee: $150 − $130.50 = $19.50 per day.

For most Melbourne families earning under $150,000, CCS covers the large majority of childcare costs. The gap fee is typically $15 to $50 per day depending on your income and the centre's fees.

CCS Income Thresholds for 2026-27

Your CCS percentage is set by your combined annual family income. These are the thresholds for the 2026-27 financial year, effective 6 July 2026.

Families with more than one child aged 5 or under in care may receive a higher CCS rate for their second and younger children. The income limits for that higher rate are set by Services Australia and indexed each year, so check the current figures at Services Australia. It applies even where the children attend different centres.

The 3 Day Guarantee: What Changed in 2026

From 5 January 2026, the Australian Government replaced the CCS activity test with a new system. Under the old rules, the number of subsidised hours a family could access was directly tied to how many hours per fortnight both parents worked, studied, or volunteered. Families where one parent didn't work at all could be limited to as few as 24 subsidised hours per fortnight, or locked out entirely.

The 3 Day Guarantee changes that fundamentally.

Where you have a partner, Services Australia uses the lower of your two participation levels to work out your hours.

"Recognised participation" replaces the old activity test. It still includes paid work, study, training, volunteering, and job-seeking, but the floor has been lifted significantly. Even families with zero recognised participation hours can now access 72 subsidised hours per fortnight.

The reform is particularly significant for stay-at-home parents who previously received little or no subsidy for care hours, part-time workers who were capped below 72 hours under the old activity test, job seekers between roles who lost access to subsidised care, and families going through temporary life changes such as illness, a new baby, or carer responsibilities.

The reform is expected to significantly increase access to early learning, particularly for families who were previously locked out by the activity test.

The 3 Day Guarantee changed the hours calculation, but it did not change the subsidy percentage. Your income still determines how much of your fees are covered. The hourly rate caps, the gap fee structure, and the 5% withholding arrangement all remain in place.

Already receiving CCS? You don't need to do anything. Services Australia automatically updated entitlements from 5 January 2026 for existing recipients. Families previously receiving fewer than 72 hours per fortnight saw their entitlement increase automatically.

CCS and Victoria's Free Kinder Program

Victorian families have access to a second layer of support that parents in other states don't: the state government's Free Kinder program. Understanding how it interacts with CCS is important for families with 3 and 4-year-olds.

Free Kinder provides up to 15 hours per week of funded kindergarten for 3 and 4-year-olds at approved services. This is a Victorian state government initiative, separate from the federal CCS. The good news is that families can access both at the same time.

Here's how the two programs interact in practice. Free Kinder covers the funded kindergarten session hours (up to 15 hrs/week). CCS applies to the remaining care hours outside of the funded kinder session. The Free Kinder funding reduces your fees by up to $2,101 per year (based on a 15-hour program), applied as an offset on your fortnightly invoice.

For example, if your child attends a long day care centre 5 days a week with an integrated kinder program, the first 15 hours of kinder each week are covered by Free Kinder funding. CCS then applies to the remaining care hours (before school, after kinder, additional days), reducing those fees based on your income.

This stacking of Free Kinder and CCS makes Victoria particularly cost-effective for families with preschool-aged children. A family earning under $88,520 with a 4-year-old in a centre offering both programs can have the majority of their weekly childcare costs covered between the two schemes.

For 2026 fee estimates specific to Early Learning Victoria centres, you can use the Early Learning Victoria fee calculator.

How to Apply for CCS: Step-by-Step

CCS is claimed through your Centrelink account via myGov. The process takes around 20 to 30 minutes if you have your documents ready. Apply at least 4 to 6 weeks before your child's start date so the subsidy is active from day one.

Before you start, you'll need: a myGov account with Centrelink linked, proof of identity (driver's licence, passport, or Medicare card), your child's birth certificate, immunisation records from the Australian Immunisation Register, recent payslips or income estimate for both you and your partner (if applicable), and details of your child's approved care provider (they'll supply their service ID).

Step-by-step claim process: 1. Sign in to myGov and select Centrelink from your linked services. 2. Go to Menu > Payments and Claims > Claims > Make a Claim. 3. Select Get started under the Families category. 4. Choose Apply for Family Assistance (including Paid Parental Leave). 5. Answer the eligibility questions, then select Child Care Subsidy on the claim options page. 6. Work through the personal details, income, and family sections until all steps show as Completed. 7. Upload any required supporting documents. 8. Review your claim summary, accept the declaration, and select Submit. 9. Note your Claim ID for your records. 10. Once approved, confirm your child's enrolment when prompted by Centrelink (your provider will notify you).

Services Australia will provide an estimated completion date when you submit. Most claims are processed within a few business days, though it can take longer during busy periods.

Once your CCS is active, the subsidy is paid directly to your childcare provider. You pay only the gap fee (the difference between the full fee and the subsidy amount). Your fortnightly invoice from the centre will show the full fee, the CCS applied, and the gap fee you owe.

Keep your income estimate current. CCS is calculated using your estimated annual income. At the end of each financial year, Services Australia balances your payments against your actual taxable income. If your estimate was too low, you may owe money back. Update your income estimate in myGov whenever your circumstances change.

Additional Child Care Subsidy (ACCS): Extra Help for Families Who Need It

Standard CCS covers most families, but some circumstances call for more support. The Additional Child Care Subsidy (ACCS) is a separate top-up payment for families facing significant financial or personal hardship. It can cover up to 100% of fees in some cases.

There are four ACCS categories. Child wellbeing: for children at risk of serious harm, abuse, or neglect. Temporary financial hardship: for families experiencing a sudden income crisis (job loss, illness, natural disaster). Grandparent: for grandparents receiving income support who have primary care of their grandchildren. Transition to work: for families moving from income support into employment or study.

ACCS is applied through the same myGov and Centrelink system. Some categories require an assessment by a social worker or approved third party. Contact Services Australia on 13 61 50 or visit a Centrelink service centre if you think you may qualify.

If English is not your first language, you can call the Centrelink multilingual phone service on 131 202 to speak with someone in your language.

Are Childcare Fees Tax Deductible in Australia?

The short answer is no. Under ATO rules, childcare costs are treated as private expenses with no direct connection to earning your income, so you cannot claim them as a deduction on your personal tax return. This applies whether you're employed, self-employed, or running a business.

A few specific points worth knowing:

Gap fees and out-of-pocket costs are not deductible, even though you're paying them so you can go to work.

CCS is not taxable income. The subsidy is paid directly to your provider and is not included in your assessable income, so you don't pay tax on it.

Self-employed parents, including sole traders, contractors, and company directors, also cannot claim childcare fees as a business expense. The ATO treats these as domestic costs regardless of employment structure.

The one narrow exception relates to employer-provided childcare on the employer's own premises, which is an employer-side FBT matter rather than a personal deduction. See Can you salary sacrifice childcare fees? below for how that works and why packaging fees at an ordinary commercial centre usually does not help.

For most Victorian families, CCS is the main way to reduce your actual childcare costs. It's not a tax deduction, but for families earning under $88,520, covering up to 90% of the capped hourly fee is far more valuable.

Is There GST on Childcare Fees?

No. Child care supplied by an approved child care service is GST-free under section 38-145 of the A New Tax System (Goods and Services Tax) Act 1999. "Approved child care service" in that section carries the meaning it has in the family assistance law, so if your centre is approved for CCS, its child care is GST-free.

In practice this means the daily fee you are quoted is the daily fee you pay. There is no 10 per cent added at the invoice stage, and your childcare statement will not show a GST component. Excursions directly related to that care are GST-free on the same basis, as are other supplies directly related to the GST-free child care.

GST-free is a specific status rather than a loose description. The centre charges you no GST and can still claim GST credits on its own purchases, which is why fees are not quoted as "plus GST" anywhere in the sector. For you as a parent the practical effect is simply that GST never enters your fee calculation, before or after CCS.

Not every line on a childcare invoice is automatically GST-free, though. The treatment attaches to the child care itself and to supplies directly related to it, so a charge for something outside that supply can be taxable. If an invoice shows a GST amount you did not expect, ask the centre for a breakdown of what it relates to.

GST-free status does not make childcare fees deductible. They are separate questions, and as the section above sets out, the answer to the deduction one is still no.

Can You Salary Sacrifice Childcare Fees?

Usually not in a way that saves you money, and the reason is fringe benefits tax rather than any rule about childcare specifically.

If your employer pays your childcare fees at an ordinary commercial centre, that is an expense payment fringe benefit and it is not FBT-exempt. The employer carries an FBT liability on the benefit, and most either decline to offer the arrangement or pass that cost back to you, which cancels out the saving that made salary sacrificing attractive in the first place.

The exemption that does exist is narrow. Under section 47(2) of the Fringe Benefits Tax Assessment Act 1986, employer-provided child care is an exempt benefit where the facility is located on the business premises of the employer or an associate. That covers genuine on-site workplace childcare. It does not cover an employer paying your fees at a centre you chose yourself, and it does not cover an employer buying places at a nearby commercial centre.

The exception worth checking: if you work for an FBT-exempt or FBT-rebatable employer (a public or not-for-profit hospital, a public ambulance service, a registered charity or a public benevolent institution), you can often package childcare fees within your employer's annual capped limit. This is common in the health and community sectors. Ask your payroll team or salary packaging provider what your cap is and whether childcare is an eligible item.

The catch that catches people: packaged amounts generally become a reportable fringe benefits amount once the total taxable value passes the reporting threshold for the FBT year, and Services Australia counts reportable fringe benefits in the adjusted taxable income it uses to set your CCS percentage. Packaging can therefore cut your taxable income and lift your CCS income at the same time, reducing your subsidy. The same figure feeds HELP repayments and other family payments.

Whether you come out ahead depends on your income, your packaging cap and your CCS percentage, and it genuinely can go either way. Model both scenarios before committing, and take advice from your salary packaging provider or an accountant rather than assuming the tax saving is the whole picture.

Can I Get CCS While on Maternity or Parental Leave?

Yes. Being on maternity or parental leave doesn't make you ineligible for CCS.

From 5 January 2026, the 3 Day Guarantee means all CCS-eligible families receive at least 72 hours of subsidised care per fortnight regardless of work or study activity. If you're on leave with an older child already in care, their entitlement is unaffected.

For families who want access to more than 72 hours, maternity and parental leave, both paid and unpaid, counts as a recognised participation type under the updated rules, as long as you're expected to return to work when leave ends. When you set up your CCS or update your details, report the hours you worked before your leave started.

Income estimates matter. If your income drops significantly while on leave, update your estimate in myGov so Services Australia recalculates your CCS percentage correctly. Parental Leave Pay is taxable income. Include it in your annual income estimate when working out your CCS rate. If you don't update and your actual income at year-end turns out lower, you'll receive a top-up, but it's easier to get it right during the year.

CCS continues as long as your child remains enrolled and attending at an approved service.

Can Self-Employed Parents Get CCS?

Yes. Being self-employed doesn't affect your CCS eligibility. The standard rules apply: you need to meet the income, residency, and immunisation requirements like any other family.

The main practical difference is how income is calculated. CCS uses your adjusted taxable income, not your gross business revenue. For sole traders, contractors, and company directors, this is the taxable income figure on your Notice of Assessment (NOA) from the ATO, after allowable deductions.

Because self-employed income can vary year to year, it's especially important to keep your income estimate updated in myGov. If your actual income at year-end is higher than your estimate, Services Australia will recalculate and you may need to repay some subsidy. Updating mid-year if your income changes significantly reduces that risk.

Finding an Approved Childcare Centre in Melbourne

CCS only applies to approved services, so the centre you choose matters. All approved long day care centres, family day care schemes, outside school hours care, and in-home care services in Victoria are registered with the federal government and listed on the Department of Education's provider search.

When choosing a centre, the subsidy is just one part of the picture. The quality of the service, its National Quality Standard (NQS) rating, staff qualifications, program approach, and location all affect the experience your child gets and the gap fee you'll pay. A centre with higher fees may still cost you less out of pocket than a cheaper centre if it has a better NQS rating and programs that suit your child's age and needs.

What to look for in an approved Victorian centre: NQS rating: services are rated Excellent, Exceeding, Meeting, Working Towards, or Significant Improvement Required. Aim for Meeting or above as a minimum. Approved provider status: confirmed on the Department of Education's provider search. Free Kinder integration: centres offering both CCS and Victoria's Free Kinder program allow you to stack both subsidies for 3 and 4-year-olds. Verified fees: understand the daily fee and whether the centre charges above the CCS rate cap before you commit.

Top 3 ELC ranks and reviews the top childcare centres across more than 50 Melbourne suburbs, using NQS ratings, verified fees, and parent reviews, with no paid placements. Browse your suburb at top3elc.com.au/victoria to compare your options and find a centre that works for your family and your budget.