101 Ways to Save Money on Your Tax - Legally! 2022-2023. Adrian Raftery

TIP

      If you have identified that you were eligible for the Child Care Subsidy in previous financial years, but have not received it, you can lodge a lump-sum claim with the Family Assistance Office. You must do this within two years of the end of the financial year for which you are claiming.

As can be seen in table 1.3, families with combined adjusted taxable incomes under $70 016 will receive a Child Care Subsidy rate of 85 per cent of the hourly cap depending on the type of child care you use (shown in table 1.4), reducing to 20 per cent for those families with incomes over $344 305 with no subsidy for family incomes over $354 304. The annual cap on the maximum amount of the subsidy that families could receive was abolished since the commencement of the 2021–22 financial year.

TABLE 1.3: child care subsidy rates (2021–22)

      Source: Services Australia https://www.servicesaustralia.gov.au/your-income-can-affect- child-care-subsidy?context=41186

Combined family income	Subsidy rate (up to hourly rate cap)
0–$70 015	85%
$70 016–$175 015	50%–85% (reducing 1% every $3000)
$175 016–$254 304	50%
$254 305–$344 304	20%–50% (reducing 1% every $3000)
$344 305–$354 304	20%
$354 305 and over	0%

      

TAX FACT

      Since 7 March 2022 the child care subsidy has increased by 30 per cent to a maximum of 95 per cent for the second and subsequent children in child care with no annual cap.

TABLE 1.4: child care hourly rate caps (2021–22)

      Source: Services Australia https://www.servicesaustralia.gov.au/type-child-care-you-use-can-affect-child-care-subsidy?context=41186#hourlyrate

Type of child care	Hourly rate cap
Centre-based day care	$12.31 per child
Family day care	$11.40 per child
After hours school care	$10.77 per child
In-home care	$33.47 per family

Given the complexity of the subsidy calculations that flow from tables 1.3 and 1.4 combined with fluctuating incomes, to reduce the risk of overpayment, Services Australia withholds 5 per cent of your child care subsidy upfront. When you submit your annual tax return, the Department will finalise the annual child care subsidy that was entitled to your family and pay any outstanding amount due to you.

      

TAX FACT

      According to Services Australia, you may be eligible to claim the Child Care Subsidy if you:

       had a child 13 or under and not attending secondary school

       passed the work/training/study test

       ensure that your children under seven either meet the Government's immunisation requirements or have an exemption

       used approved child care such as long day care, family day care, in-home care, outside school hours care, vacation care and/or some occasional care services.

      Parents can claim up to 100 hours of CCS per child per fortnight dependent on passing a work/training/study test. Once eligible, the rebate is paid weekly or fortnightly by Services Australia based on child care attendance information it receives electronically from your service provider. Even if your child is absent from child care, the Child Care Subsidy can still be paid in some situations. You can receive payments for up to 42 absences per financial year, if you are charged for child care. These absent days can be taken for any reason with no evidence required.

      

PITFALL

      It is important to conservatively estimate your family income for the purposes of the Child Care Subsidy, because if you overestimate it you may need to pay back some or all of what you received during the year (even allowing for the 5 per cent amounts previously withheld by Services Australia).

      

PITFALL

      Under the No Jab No Pay legislation, if your children (up to the age of 19) do not meet the immunisation requirements then you will not be eligible for Child Care Subsidy. Your child must be fully immunised, on a catch-up schedule or have a valid exemption in order to receive these payments. Note that while conscientious objection is not considered an exemption category, children with verified medical exemptions by a General Practitioner such as medical contraindication, natural immunity or participation in a recognised vaccine study are allowed.

7 LOW-INCOME EARNERS

      There are a few tax benefits available if you are a low-income earner, such as when you work part time.

      Low-income tax offset

      The low-income tax offset (LITO) is a tax rebate for individuals on lower incomes. In 2022–23, the LITO will provide a tax rebate of $700 for individuals who earn less than $37 500. The offset is reduced by 5 cents for every dollar that your taxable income exceeds $37 500 up to $45 000. The offset is then reduced by 1.5 cents for every dollar that your taxable income exceeds $45 000, before phasing out entirely at $66 667.

      To be eligible for LITO, you must be a resident for tax purposes and lodge a tax return. The ATO will automatically apply this offset to your assessment for you if you're entitled to it. Minors cannot use the LITO to reduce tax payable on their unearned income.

      Low and middle income tax offset

      In addition to LITO, the government reinstated the low and middle income tax offset (LMITO) in the 2021–22 federal budget for the 2021–22 year only. The 2022–23 federal budget proposed an increase of $420 to LMITO such that it will be an additional tax rebate of $675 for individuals who earn less than $37 000. The offset is increased by 7.5 cents for every dollar to $48 000 and stays at $1500 for taxable incomes