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Written by Amie Andrews, Nominated Supervisor Castle Hill
Child Care Subsidy Explained: How to Reduce Your Fees in NSW
A plain-English guide for NSW families who want to understand the system and make the most of it.
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 covers a portion of your fees based on your family’s combined income, the number of hours of approved care your child uses, and how many hours of recognised work, study, training, or volunteering you do each fortnight.
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 Activity Test Explained
The activity test determines how many hours of subsidised care you can access each fortnight. If you work, study, volunteer, or train for 8 to 16 hours per fortnight, you can access up to 36 hours of subsidised care. Between 16 and 48 hours of activity, that increases to 72 hours. At 48 hours or more, you can access up to 100 hours.
If you do not meet the activity test, you can still access 24 hours of subsidised care per fortnight for social, educational, or developmental reasons. This applies to all eligible children regardless of activity level.
How Much Subsidy Will You Actually Receive
The subsidy percentage is based on your family’s combined annual income. As of 2025, families earning up to approximately $83,280 receive the maximum subsidy of 90 percent. The percentage gradually reduces as income rises, and at around $530,000 it tapers to zero. These thresholds are indexed annually, so it is worth checking the Services Australia website for the current figures.
The subsidy is applied to whichever is lower: the actual fee your centre charges or the government hourly rate cap. If your centre’s fees exceed the rate cap, you pay the full difference above the cap without any subsidy applying to that portion.
How to Calculate Your Gap Fee
Your gap fee is what you pay after the subsidy is applied. As an example: if the government rate cap is $13.73 per hour, your centre charges $14.20, and your subsidy rate is 85 percent, the subsidy covers $11.67 of the capped rate. You pay $2.06 on the capped portion, plus the $0.47 above the cap in full, for a total of $2.53 per hour out of pocket.
The easiest way to get an accurate estimate is to ask the centre directly. When you enquire at Dashing Ducks Castle Hill or Dashing Ducks Croydon, we are happy to walk you through what your gap fee would look like based on your income and hours.
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. The most important is keeping your income estimate with Centrelink accurate. 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 your estimate with Centrelink whenever your income changes significantly during the year.
Also check that your activity hours are recorded correctly. If your working hours have increased, you may be entitled to more subsidised care hours per fortnight than you are currently accessing.
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.
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