Child Care Subsidy overpayments explained

Many families across the country have had their Child Care Subsidy payments balanced for the first time. For some families, they will have received an overpayment. Department of Human Services General Manager Hank Jongen provides details to help families understand what getting a Child Care Subsidy overpayment means.

We are in the process of balancing Child Care Subsidy (CCS) payments for the first time. If you have received other family assistance payments from us (such as Family Tax Benefit or Child Care Benefit), this will be a familiar process, but for some CCS recipients this is brand new.  Also, if CCS is the only payment you receive from us, this will be the first time you have estimated your income. Your income estimate plays an important role in getting your payments right. Your rate of CCS paid through the year is calculated using your estimate. Even a small change in your income can make a difference to the amount of CCS you get. We check your family income estimate against your family’s actual income at the end of the financial year. If your family’s actual income is more than your estimate, you may have to pay money back

Right now, some families might have a letter from us asking to repay money. We want to help to ease some of this worry by letting you know what will happen and what you can do if you get a debt.

How it works

We won’t be able to balance your payments until you have lodged your tax return with the Australian Taxation Office (ATO) or told us you don’t need to.

The CCS we pay you during the year is based on the income estimate you provided us, so once we know what you have actually earned for the year we can make sure we have paid you the right amount. This could mean we haven’t paid you enough and you will receive a top-up to your payment. However, this could also mean that you have been paid too much and you will need to pay this money back.

There are different pieces of information we need to confirm incomes, such as information from the ATO and final attendance reports from child care providers. Because every family is different, the timeframe for balancing payments will vary.  Activity levels also affect eligibility for Child Care Subsidy. We use activity levels to work out the number of hours of subsidised child care a family can get each fortnight. Families need to make sure they provide accurate activity levels as this can also result in a debt being raised when we balance payments. It is important that you tell us within 28 days of your activity level changing as we cannot always backdate these changes and you may not be able to receive an increased subsidy for your activity.

Managing an overpayment

Once we have balanced your payments you will receive a letter, which for the vast majority of families will appear in your myGov inbox.  The letter will detail what subsidy you received, what you were entitled to and the difference, if any, between these. If you have been overpaid CCS during the year, you will have a debt advised on this letter.

As part of trying to help families avoid a debt, we automatically withhold five per cent of your CCS payment throughout the year or you may have also elected to withhold a higher percentage. This withheld amount will be used at balancing time to offset any overpayments received. However, if your overpayment is greater than your withholdings, you will need to pay this money back. You have 28 days to do this, and while some families will be able to pay off their whole debt amount in this time, we understand that others may not. If this is the case for your family, the letter also has details about other repayment options available to you.

I do need to let you know that if you don’t repay the money in full, or contact us to discuss paying your debt prior to the 28 days deadline, we will set up an automatic deduction. We can recover your debt from your Family Tax Benefit or income support payment or future CCS payments. We want to work with you to help manage any overpayment. If you are no longer receiving CCS or any other payment from the department and there isn’t a suitable repayment arrangement in place within 28 days, we may refer your debt for external collection.

Families can manage and view their debts online by selecting Money You Owe in their Centrelink online account through myGov or the Express Plus Centrelink mobile app.

Where you are not receiving a regular payment from us for automatic deductions, there are a variety of other repayment options such as direct debit from your bank account, debit or credit card payments, BPAY and Australia Post’s POSTbillpay. If a payment plan is the best option for you to manage your debt, you can do so online via Money You Owe or by contacting our Debt Recovery Team on 1800 076 072, to set this up.

If you are receiving a regular payments from us, it’s important to know if you set up an online repayment plan, automatic deductions will occur from the payments you receive from us.

Can I seek a review of the decision?

It’s really important to know that if you disagree with a decision we’ve made, you have the right to ask us to review it.  The first step in this process is to have a chat to one of our staff who will explain the balancing outcome to you. If you are not satisfied with the explanation, an experienced officer will check the decision. If there has been a mistake, it may be possible to fix it, without having to start a formal process.

If you still disagree with the decision, you can begin a formal review process. To formally review a CCS payment decision, call us on 136 150, visit a service centre or complete a Review of Decision form and post it to us or upload online. You will need to provide supporting evidence to us, which I encourage you to do as soon as possible. We may contact you again before a final decision is made to confirm details or seek more information. We aim to finalise this as quickly as possible, but timeframes can vary depending on individual circumstances and access to the necessary information.

During a review process you may still need to make payments towards the debt. If the review finds you owe less money, and you have no other outstanding debt, we’ll refund any additional money you’ve paid.  The other option is you can ask us to pause your debt repayments until our review is complete. If this is something you would like to do, please make sure you ask us when you first begin the formal review process.

How to reduce the chance of being overpaid

Please know that we don’t want anyone to have a debt – we want everyone to receive the amount of subsidy they are entitled to.  As we approach the mid-point mark of this financial year, it is a good time for families to think about their estimate. We want to help families to estimate their income as accurately as they can. The best way to do this is to regularly review your estimate throughout the year, particularly if you do shift work or change jobs. Remember that bonuses, extra shifts over holiday periods, a change in your relationship status, your activity levels decrease or a promotion can impact your estimate and the subsidy you are entitled to. You can update your income as often as you like.

Another option available to families is to increase the amount of CCS that we withhold. As mentioned earlier, we automatically withhold five per cent of CCS payments for all families as a way to help families manage the impact of an overpayment and avoid a debt. This level of withholding will suit some families, however, because all families are different and work situations vary, we give all families the choice to increase this withholding. If you increase this, we will withhold more of the regular payment going to your child care provider. This will mean your child care fees will increase. However at the end of next financial year if you have an overpayment and as a result a debt, we will use the withholdings to reduce your debt. For some families this could mean their overpayment is covered and no debt is raised. And, if your estimate resulted in the correct CCS being paid, and you have not been overpaid, we will release the withholdings to your registered bank account.

If you have a question about the balancing process or what to do if you have a debt, you can also ask us on Family Update on Facebook or tweet FamilyUpdateAU.

Hank Jongen

Department of Human Services

More information

  • If you require more information or wish to discuss your debt, we encourage you to contact us on 136 150