Is Child Care tax deductible?

Child care expenses are a common budget consideration for many families with young children in Victoria. One question that often comes up is whether or not these expenses are tax deductible. In this blog post, we will explore this topic and provide you with an understanding of whether or not child care expenses are tax deductible. The information shared here is general in nature, you should always get professional advice specific to your individual needs and particular circumstances.

The short answer is no, child care expenses are not tax deductible anywhere in Australia. The reason, as published on The Australian Tax Office (ATO) website, is: “You can’t claim a deduction for the cost of child care (including school holidays and before and after school care) when you’re working. It’s a private expense, and the expenses have no direct connection to earning your income”.

Therefore, you cannot claim your child care expenses as a tax deduction. 

Like with most things finance related, you always need to look at the entire picture. While child care fees themselves are not tax deductible, the amount you actually pay is subsidised by the government, under a scheme known as the Child Care Subsidy. 

The Child Care Subsidy (CCS) is a financial assistance program provided by the Australian government to families to help cover the cost of child care. The aim of the program is to make child care more affordable and accessible for families, especially those who are working, studying, or looking for work. The CCS is income-tested and is paid directly to approved child care providers to reduce the fees that families have to pay. The amount of CCS a family is eligible for depends on their income, the number of hours of care they use, and the type of care they use. The CCS is available for approved child care services in Australia, including long day care, family day care, in-home care, and outside school hours care.

It’s important to know that if you are eligible for the CCS you won’t be required to pay the full daily fee of the child care centre. Instead of spending money and claiming a portion back later (claiming a tax deduction), the CCS scheme pays part of your child care fees each week your child attends child care. 

For example, if the daily fee is $150, and you qualify for an 85% CCS, you will only be required to pay $22.50 (15% of the daily fee) to the child care centre your child attends, the government will pay the remaining $127.50 (85% of the daily fee) directly to the centre on your behalf.

To read more about How to apply for the Child Care Subsidy, click here.

To calculate your CCS entitlement using our online calculator, head to this page.

In conclusion, child care expenses are not tax deductible in Australia, but many families do meet the eligibility criteria set by the ATO and are eligible for the CCS. If you require help or assistance please reach out to us at Choklits Surrey Hills on 0398999404 or email us [email protected].