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Child Care Subsidy (CCS) Percentage Rates & Activity Test Guide (2026–27)
- Authors
- Name
- Charlotte Smith
- https://x.com/CharlotteSmithAU
Child Care Subsidy (CCS) Rates & Activity Test Guide (2026–27)
For working parents in Australia, early childhood education and care (ECEC) is one of the most substantial ongoing household expenses. Administered by Services Australia through Centrelink, the Child Care Subsidy (CCS) directly covers a percentage of daily childcare fees, significantly reducing out-of-pocket costs for eligible families.
Following recent government reforms, families earning up to the base income threshold receive a maximum subsidy of up to 90%, with higher subsidies available for families with multiple children aged 5 or under in care.
This guide explains how CCS percentages are calculated, the Centrelink Activity Test tiers, hourly rate caps, and how to estimate your net daily out-of-pocket fees.
1. How the Child Care Subsidy Is Calculated
Your Child Care Subsidy percentage depends primarily on three factors:
- Combined Family Adjusted Taxable Income (ATI): Determines the percentage of your child care fees the government will cover (between 0% and 90%).
- Activity Level of Both Parents: Determines the number of subsidized hours of care you can claim per fortnight (up to 100 hours per child).
- Type of Child Care Service: Subject to maximum hourly rate caps set by the Department of Education.
2. CCS Income Thresholds & Percentage Tiers (2026–27)
| Combined Family Income Tier | Base CCS Percentage (First Child) | Higher CCS for Second & Subsequent Children (Aged \le 5)* |
|---|---|---|
| Up to $83,280 | 90% (Maximum subsidy) | Up to 95% |
| $83,281 – $533,280 | Scales down by 1% for each $5,000 of income above $83,280 | Scales down progressively (retains up to 30% higher rate) |
| $533,280+ | 0% (No subsidy payable) | 0% |
*Higher Child Subsidy: If you have more than one child aged 5 or under enrolled in approved care, your second and younger children receive an extra up to 30% higher subsidy (capped at a maximum of 95%), saving families thousands of dollars per year.
3. The Centrelink Activity Test
To qualify for subsidized hours, both parents (or the single parent in a sole-parent family) must meet the Activity Test. Recognised activities include paid work, self-employment, authorized leave, actively looking for work, recognized training/study, and voluntary community work.
| Hours of Activity per Fortnight (Lowest Earning Parent) | Maximum Subsidized Hours of Care per Fortnight |
|---|---|
| Less than 8 hours (unless exempt) | 0 hours (or 24 hours under special safety net provisions) |
| 8 hours to 16 hours | 36 hours per fortnight |
| More than 16 hours to 48 hours | 72 hours per fortnight |
| More than 48 hours | 100 hours per fortnight (Maximum allowance) |
Aboriginal and Torres Strait Islander children can access up to 36 hours of subsidized care per fortnight regardless of parental activity levels.
4. Government Hourly Rate Caps by Care Type
The government applies a maximum Hourly Rate Cap when calculating your subsidy. If your childcare provider charges more than the cap, you must pay 100% of the difference out-of-pocket:
- Centre-Based Day Care (Long Day Care): ~$14.29 per hour.
- Family Day Care: ~$12.51 per hour.
- Outside School Hours Care (OSHC): ~$12.51 per hour.
- In-Home Care: ~$35.63 per family per hour.
Real-World Example:
- Long Day Care Center Fee: $140 for a 10-hour day ($14.00/hr, below cap).
- Combined Family Income: $110,000 (qualifies for an ~84.5% CCS rate).
- Government Pays: $140 \times 84.5% = $118.30 paid directly to the center.
- Parent Out-of-Pocket Fee: $21.70 per day.
5. Annual Withholding (5% Buffer)
Services Australia automatically withholds 5% of your CCS entitlement throughout the year. At the end of the financial year, when you and your partner lodge your annual income tax returns, Centrelink reconciles your actual income against your initial estimate. If your estimate was accurate, the 5% buffer is refunded to you in a lump sum.
6. Calculate Your Family Child Care Subsidy
Estimate your exact CCS percentage, subsidized hours, and daily out-of-pocket costs using our free calculators:
- Child Care Subsidy Calculator — Model subsidy percentages and daily out-of-pocket gap fees.
- Childcare Cost Calculator — Compare long day care vs family day care vs OSHC weekly costs.
- Family Tax Benefit Calculator — Check eligibility for FTB Part A & B family payments.