Date issued: 31 May 2007

Families will have a one-time opportunity to receive a child-care rebate of up to $8000 per child after 1 July 2007, as a result of increased child-care benefits announced in the 2007-08 Federal Budget.

CPA Australia senior tax counsel, Garry Addison said the Budget changes mean qualifying families will receive a child-care rebate twice in 2008 for out-of-pocket, approved child-care expenses incurred in the years ended 30 June 2006 and 30 June 2007. 

The government is also increasing the total child care benefit payable for 2008 by approximately 13 percent.

Firstly, a 30 per cent rebate will be available for the net out-of-pocket costs of approved child care for the year ended 30 June 2006, which will be claimed as a tax offset in your 2007 income tax return. 

The rebate available is capped at $4000 for each child.The offset will reduce the tax payable by the parent incurring the costs. Any balance of the offset cannot be refunded but could be transferred to the other spouse.

From 1 July 2007, the 30 per cent rebate will be paid directly by the Family Assistance Office to the parent incurring approved child care costs.

No claims need to be filed in the income tax return as the amount will automatically be paid soon after 1 July 2007. You will get the full $4000 irrespective of the amount of tax you pay.

Mr Addison said that the 30 per cent benefit only applies to the out-of-pocket expenses paid to approved child-care providers, less the amount of child care benefit paid by the Family Assistance Office to parents. 

Thus, if you pay $80 for vacation child care and receive a $20 child care benefit, you can get a rebate of 30 per cent on the net $60 cost, which equates to a potential credit of $18. 

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