Content
Written by Amie Andrews, Nominated Supervisor Castle Hill
Last reviewed 7 September 2026, against current Services Australia and Department of Education guidance for 2026-27.
Child Care Subsidy Explained: How to Reduce Your Fees in NSW
A plain-English guide for NSW families who want to understand how the Child Care Subsidy works in 2026-27 and what they will actually pay.
The rules changed on 5 January 2026. The old activity test is gone, replaced by the 3 Day Guarantee. If you last looked into CCS before then, the number of subsidised hours you can get has almost certainly changed.
Estimate your Child Care Subsidy and see your likely daily gap fee in under a minute.
What Is the Child Care Subsidy and Who Can Get It
The Child Care Subsidy (CCS) is a Federal Government payment that reduces what you pay for approved childcare. It is paid directly to your centre, so it comes off your invoice rather than arriving as a cash payment. How much you get depends on your family’s combined income and the number of hours of approved care your child uses.
To be eligible, you need to hold Australian citizenship or a qualifying visa, your child must be under 13 and not yet in secondary school, they need to be up to date with immunisations, and the service must be an approved provider. Most families using long day care centres, such as Dashing Ducks Castle Hill or Dashing Ducks Croydon, will qualify.
The 3 Day Guarantee: How Many Subsidised Hours You Get
From 5 January 2026 the activity test no longer decides how many subsidised hours you can access.
Under the 3 Day Guarantee, every CCS-eligible family gets at least 72 subsidised hours per child per fortnight, which is three days a week, no matter how much work, study, training or volunteering the parents do. You do not need to report any activity to get this.
Some families get the full 100 hours per fortnight, including where:
- you or your partner have more than 48 hours of recognised activity per fortnight, which you do need to report to Services Australia
- an approved exemption applies, or your circumstances qualify under the exceptional circumstances rules
- the child is a First Nations child, who can access 100 hours regardless of activity
The rules around exemptions and exceptional circumstances are detailed, so check your own situation with Services Australia rather than assuming.
Two things are worth being clear about. The guarantee covers subsidised hours, not a place: whether a centre has a vacancy on the days you want is a separate question, and enrolment still depends on availability at the service. And it does not make care free. You still need to meet the CCS eligibility rules above, and almost every family still pays a gap fee.
How Much Subsidy Will You Actually Receive
Your subsidy percentage is set by your combined family income. For 2026-27, families earning up to $88,520 receive the maximum rate of 90 per cent. Above that the rate drops by 1 per cent for every $5,000 of income, reaching zero at $538,520. A family on $120,000, for example, sits about $31,480 over the threshold, which is six full steps, giving 84 per cent.
If you have more than one CCS-eligible child aged 5 or under, your second and younger children get a higher rate while your eldest stays on the standard rate. That higher rate starts at 95 per cent for incomes up to $146,437, steps down to 80 per cent by $191,437, holds at 80 per cent through to $270,727, then falls to 50 per cent by $360,727. Above $370,727 the higher rate no longer applies and every child is on the standard rate. All of these thresholds are indexed each 1 July.
Centrelink also withholds 5 per cent of your subsidy through the year as a buffer against income estimate errors, and returns it at tax time once your actual income is confirmed. It is worth budgeting for the amount with the withholding applied, because that is what you will actually pay week to week.
The subsidy is worked out on whichever is lower, your centre’s hourly fee or the government hourly rate cap. Anything your centre charges above the cap is paid by you in full. From 6 July 2026 the caps are $15.19 an hour for centre based day care for a child below school age, $13.30 an hour for a school aged child, $14.08 for family day care and $41.31 per family for in home care. Long day care at Dashing Ducks sits under the cap, so the subsidy is calculated on the full fee.
How to Calculate Your Gap Fee
Your gap fee is what you pay after the subsidy is applied. Take a family on $120,000 with one child at Castle Hill, where the daily fee is $160 for an 11-hour session.
- The hourly fee is $160 divided by 11 hours, or $14.55 an hour. That is under the $15.19 cap, so the subsidy is worked out on the full fee.
- An income of $120,000 gives a subsidy rate of 84 per cent.
- 84 per cent of $160 is $134.40.
- Centrelink withholds 5 per cent of that, which is $6.72, so $127.68 is paid to the centre.
- You pay the difference, which is $32.32 for the day.
The $6.72 held back comes back to you at tax time if your income estimate was accurate.
If a centre charged $175 for the same 11-hour session, that works out to $15.91 an hour, which is above the cap. The subsidy would then be calculated on $15.19 an hour, and the extra $0.72 an hour would be paid in full on top of the gap.
Estimate your Child Care Subsidy using your own income, days and centre.
How to Apply for Child Care Subsidy in NSW
You apply for CCS through your myGov account linked to Centrelink. It is worth starting the process before your child’s first day, as approval can take a few weeks and backdating is limited.
The key steps are: log in to myGov and link to Centrelink, complete the CCS claim through the Centrelink section, and then confirm your child’s enrolment with your chosen centre once the claim is approved. Your provider will also need to submit an enrolment notice on their end before payments begin.
What You Need Before You Apply
Before you start your claim, have the following ready: your myGov login details (and your partner’s if applicable), your tax file number, an estimate of your combined annual family income, and your child’s immunisation history from the Australian Immunisation Register, which is accessible through myGov. You will also need your bank account details for payment processing.
If your child is not yet immunised, get this sorted first as it is a firm eligibility requirement that cannot be waived.
How to Maximise Your Subsidy and Reduce What You Pay
A few practical steps can meaningfully reduce your out-of-pocket costs.
- Keep your income estimate accurate. This is the single biggest lever now. If your actual income at tax time is lower than your estimate you receive a top-up; if it is higher you may have a debt to repay. Update Centrelink whenever your income changes significantly during the year.
- Only report activity if you are chasing more than 72 hours. You no longer need to report anything to get your guaranteed 72 hours a fortnight. If you and your partner do more than 48 hours of recognised activity a fortnight and you want the full 100 hours, that is when reporting matters.
- Check the higher rate is being applied if you have two or more children aged 5 or under. It should be automatic, but it is worth confirming.
- Confirm your enrolment has been submitted. No subsidy is paid until your provider’s enrolment notice is confirmed in your myGov account.
- Watch the absence rules. Each child gets 42 allowable absence days per financial year, across all services, with CCS still paid. You do not need to give a reason, and public holidays count towards the 42. Once they are used up, subsidy is only paid for additional absences in specific categories, which need supporting documentation.
Asking Your Centre About Fees Upfront
When you enquire at a centre, ask for the daily rate, the hourly rate, and whether their fees sit at, below, or above the government hourly rate cap. Also ask how fees are charged on public holidays or when your child is absent. Our guide to choosing an approved provider in Castle Hill covers everything else worth checking. These details affect your weekly costs significantly and are worth understanding before you sign an enrolment agreement.
You can contact Dashing Ducks to ask about current fees and get a clear picture of what your gap fee would be at either our Castle Hill or Croydon centre.
Additional Support for Lower-Income Families
If you are on the maximum subsidy rate and are still finding costs difficult, you may be eligible for the Additional Child Care Subsidy (ACCS). This is a top-up payment designed for families in specific circumstances, and it can cover up to 100 percent of the applicable hourly rate cap.
Child Care Subsidy Top-Up (ACCS)
There are four types of ACCS. Child Wellbeing applies to children who are at risk of harm, abuse, or neglect. Grandparent applies where a grandparent is the primary carer and receives certain Centrelink payments. Temporary Financial Hardship applies when a family has experienced a significant financial event such as job loss or a natural disaster. Transition to Work applies to families moving from income support payments into employment or study.
Eligibility requirements and application processes differ across each type. The Services Australia website has full details on how to apply and what documentation you need.
Choosing a Centre That Helps Your Budget Go Further
The gap fee matters, but so does the value behind it. A centre that charges a little more but provides qualified long-term educators, fresh on-site meals, a well-resourced outdoor environment, and genuine continuity of care often costs less in the long run than a cheaper option where turnover is high and settling-in problems drag on for months.
At Dashing Ducks, we are a family-owned centre with locations in Castle Hill and Croydon. We are transparent about our fees and happy to talk through your CCS entitlement when you get in touch. Book a tour and come and see what the place is actually like. You can also read more about who we are and what we stand for as a family-owned provider.
Not sure what your fees would look like? Estimate your Child Care Subsidy using the current 2026-27 rates, or book a tour at Castle Hill or Croydon and we will walk through your entitlement with you.
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