Explainer for parents: what the changes in childcare subsidies means for you.

The Senate sat late into Thursday night to pass federal government’s childcare package, which they claim will benefit one million families.

Under the $1.6 billion package, a family earning less than $65,000 a year will pay just 15 per cent of their childcare fees with taxpayers footing the remainder of the bill.

The means-and-activity tested subsidy, which requires both parents to work, study, volunteer, or search for work for at least eight hours a fortnight, tapers down to 20 per cent for those earning $340,000.

All subsidies cut off for families earning more than $350,000.

Here’s what you need to know about the changes to childcare fee subsidies:

• Scrap the existing system of payments including the Child Care Rebate (covers 50 per cent of fees up to annual cap of $7500) and the means-tested Child Care Benefit.
• Replace them with a single, means- and activity-tested subsidy.
• Activity test means both parents must work, study or volunteer at least eight hours a fortnight.
• Payment covers 85 per cent of fees for families on $65,710 or less.
• Covers 50 per cent of fees for families on $170,710-$250,000.
• Tapers down to 20 per cent between $250,000-$340,000
• Families earning more than $350,000 receive no subsidy
• Fee subsidies based on a set hourly rate ($11.55 centre-based day care, $10.70 family day care, $10.10 outside school hours care).
• No annual cap on subsidies for families on $185,710 and under.
• $10,000 annual cap on subsidies for families earning more than $185,710.
• A bonus subsidy for disadvantaged families, such as those with children at risk of abuse or neglect; those experiencing temporary financial hardship; grandparent carers on welfare.
• Starts on July 2, 2018.
• 1.2 million children were in child care in 2016.
• Government figures say almost 816,000 families will be better off.
• 128,000 families will get reduced subsidies, including 52,100 earning less than $65,710 a year (mainly due to activity test).

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