Child­care cash back­flip to boost fam­ily bud­gets ev­ery fort­night

The Sunday Telegraph (Sydney) - - NEWS -

A BLAN­KET tax built into the fed­eral govern­ment’s new child­care sys­tem has been halved, giv­ing fam­i­lies more money in their pock­ets each fort­night.

The govern­ment suc­cumbed to mount­ing pres­sure and back­flipped on a plan to with­hold 10 per cent of child­care sub­si­dies owed to fam­i­lies un­til the end of the fi­nan­cial year in or­der to pre­vent bill shock.

Un­der the cur­rent sys­tem in­tro­duced by La­bor, the govern­ment with­holds up to 15 per cent of some pay­ments, in­clud­ing the Child Care Re­bate, as a buf­fer to “off­set po­ten­tial debts”. But lower in­come fam­i­lies who re­ceive the means-tested Child Care Ben­e­fit have al­ways re­ceived the full amount up­front.

Mod­el­ling pro­vided to The Sun­day Tele­graph re­vealed fam­i­lies will now be hun­dreds of dol­lars bet­ter off each year fol­low­ing the govern­ment’s snap de­ci­sion to re­duce its blan­ket with­hold­ing rate from 10 per cent to 5 per cent.

A fam­ily on a com­bined in­come of $150,000 with two chil­dren in child care three days a week will have $900 a year held by the govern­ment com­pared with $2100 un­der the cur­rent sys­tem. The govern­ment has up­dated its on­line cal­cu­la­tor to re­flect the change.

Ed­u­ca­tion Min­is­ter Si­mon Birm­ing­ham said fam­i­lies would be able to re­quest a lower with­hold­ing rate in the sys­tem from July and “they’ll get ev­ery cent they’re en­ti­tled to”.

La­bor said the govern­ment’s back­flip was “an ad­mis­sion the un­fair tax was go­ing to hit the hip pock­ets of fam­i­lies”.

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