Will it give me a bigger tax return?
Readers Question: I want to return to work but don’t understand the childcare rebate… does it cut my weekly childcare cost straight away or will it give me a bigger tax return?
Answer: Wow this is a great question and it is no wonder you don’t understand it … what a mine field?
Well the basic answer is; both is ‘probably’ correct, depending on whether you qualify for the two payments that are available. The two types of payments are Child Care Benefit CCB and Child Care Tax Rebate CCTR. CCB is available to low income earners, your approved child care provide will reduce your payments based on your eligibility, meaning you will pay less than their advertised rates. You actually pay less up front.
CCTR is an additional amount you can claim if eligible, in a lump sum when you do your tax return annually, or now available in quarterly payments and adjusted in the final quarter after the ATO and Family Assistance Office have assessed your entitlement. This amount is 50% of your out of pocket expenses to a maximum of $7500 per year. This does not reduce your up front payments.
An example is; your provider reduces your fee by $20.00 per day and you pay $30.00 per day, that is CCB applied to your situation, you can then claim 50% of the $30.00 per ‘days of attendance’ that you physically paid, in your tax return or quarterly payment. That is CCTR applied to your situation. (*Not based on any actual fees.)
The Family Assistance Office website has full details about eligibility levels, go to these links to see if you are eligible:
Family Assist.gov CCB or Family Assist.gov CCTR
I hope this helps.
Leigh
Provided By Mum Zone – Resources for Mums www.mumszone.com.au
