Expat’s Guide To The Centrelink Benefits

When you move to Australia on a PR visa, you can claim certain social security benefits. These benefits or payments are given under Centrelink program by the Australian government, hence they are generally called Centrelink benefits or Centrelink payments. Centrelink benefits are not just limited to the low-income groups but also available for the families, job seekers, disabled and senior citizens.

Centrelink benefits practically cover almost all aspects of life such as having baby, raising a family, looking for a job, paying for education, paying your rent and electricity and even household help…phew! Australian government certainly knows how to take care of its people. 😉

Which Centrelink Benefits You Can Get As A Migrant?

Though there is a wide range of Centrelink benefits, that doesn’t mean you will get all of them. All these benefits have elaborate criteria as to who can get them and who can’t. As a newly arrived migrant, you can claim certain benefits right away while for certain others you have to wait. Here is the list of benefits you can claim immediately, provided you satisfy the eligibility criteria.

Family Tax Benefit

This Centrelink benefit is provided to families to assist them with the costs of raising children. This payment is especially useful to the families with the single source of income.

Family Tax Benefit has two parts, called FTB A supplement and FTB B supplement. Depending on your family income and how many children you have, you can get either FTB A or FTB B or both. You can find all the gory details here – https://www.humanservices.gov.au/individuals/services/centrelink/family-tax-benefit/payment-rates

Understanding what means family income is important. Most people consider family income as just taxable income. It’s not!

Family income basically means the sum of taxable income, superannuation contributions and foreign income for you and your spouse for a year. It also includes other things such as fringe benefits, pensions, investment losses, but for most of the cases, the above three things should be good enough.

Apart from income criteria above, you must have a dependent child because obviously it is meant as the income support for raising children. Also, your child must be up to date with all the immunisations prescribed in the national immunisation program schedule. If you don’t, there won’t be any child-related benefits.

2018 Waiting Period Changes

There is a proposal to introduce a three-year waiting period for newly arrived migrants before they can claim Family Tax Benefit and some other Centrelink benefits. Currently, there is no such waiting period for family tax benefit. Thankfully the new waiting period will not apply to child care subsidy. The new proposal is yet to be approved by Parliament and it will come into effect on 1st July 2018. You can find more details here: https://www.aph.gov.au/About_Parliament/Parliamentary_Departments/Parliamentary_Library/FlagPost/2017/December/Waiting_period_for_migrants

Child Care Benefit & Child Care Rebate

Raising a child can be financially tough in a country like Australia where daycare costs are going through the roof. To help families with these costs, Australian Government provides two types of child care payments – Child Care Benefit (CCB) and Child Care Rebate (CCR).

Child Care Benefit or CCB is a payment given to help with the daycare costs. It can either be paid directly to the daycare centre so that they will charge reduced fees or you can get it as a lump sum amount paid directly to you. Again, there is a family income test and immunisation requirement to claim this benefit. Also, your child must attend approved daycare centre which means you can’t claim it for hiring a nanny. Depending on your situation, you can get as high as $215 per week towards child care benefit.

In addition to the child care benefit, Australian government also helps you by paying 50% of the daycare fees for each child per year, called Child Care Rebate or CCR. The best part of CCR is that it is not income tested, which means you don’t have to be earning less to get this. However, depending on your income level, there is an upper cap for how much you can get per year. The only two conditions are that a) you must be working or looking for work for at least 15 hours per week and b)your child must be immunised.

Child Care Subsidy

From 2nd July 2018, the above-mentioned child care payments i.e. CCB and CCR won’t exist. Instead, the Australian government has introduced a new benefit called Child Care Subsidy or CCS. Child Care Subsidy is going to replace all previous child care related Centrelink benefits.

There are three important factors to understand to get the most out of Child Care Subsidy.

1. Hours Of Activity

How much subsidy you can get depends on the number of hours you work per fortnight. Activity, however, does not mean just the paid work. Job search, unpaid work, leaves, working for the family business, work-related training and volunteering among other things are all examples of activity.

You can also combine two or more activities to calculate total activity hours. Basically, if you do any of these activities for more than 48 hours per fortnight, you can get the maximum subsidy of 100 hours per fortnight. Here are the slabs for the subsidy.

You are exempted from the above criteria and still can get 24 hours of subsidy per fortnight if your family income is $66,958 or less per year. There is also an exemption if your child is 4 years old and attends kindergarten program, in which you can claim 36 hours of subsidy per fortnight.

An important consideration here which I came to know only when I discussed with child care. Let’s say your child goes to daycare all 5 days a week and you are eligible for CCS according to income level. It is very important to check for how many hours you put your child in daycare. If you put him/her for more than 10 hours, your out of pocket expenses will increase. For example, if your child goes for 12 hours for 5 days, it comes to 120 hours per fortnight. But as the government subsidises maximum of 100 hours per week, you need to pay for 20 hours of unsubsidised care. If you can just change your drop-off and pick-up schedule by small amounts to limit the child care time to 10 hours or less, your costs will go down.

How Much Government Will Pay?

Depending on your total family income, the amount of subsidy differs. The government will pay the maximum of 85% of your childcare costs if your income is up to $66,958 and won’t pay anything if family income is $351,248 and above.

This subsidy is paid directly to the childcare, so you can pay reduced fees. This is a change from the current system where you can choose to either get lumpsum amount or reduce the fees. Also, 5% of weekly subsidy is held by the government until financial year end. This amount will be used for an adjustment if, after filing the tax return, the government finds out that they overpaid you. If there is no need for adjustment, the government will credit your account with this amount. This percentage has also changed from 10% to 5%. More power to you!

Annual Subsidy Cap

This is another major area which will bring more savings to us, as a family. In case of current Child Care Rebate (CCR), there was an annual cap of $7,613 per child which was in all practical sense, quite inadequate.

However, with CCS, the annual cap depends on your family income too. If your family income is $186,958 or less, there is no cap on CCS. If your family income is more than that, then CCS is capped at $10,190 per child per year. By the way, I have no idea where they get so many odd figures. Why not just round it to the nearest 100?

In any case, you still gonna save at least $2577 extra per child per year if you use the entire subsidy, which is great!

Child Care Subsidy Assessment

You won’t automatically get CCS, even if you are getting CCB and CCR. In fact, if you have a registered myGov account, you might have already received a lot of reminders to complete the Child Care Subsidy Assessment.

Child Care Subsidy Assessment is a 4-step process where you will provide details about your family income, job situation for you and spouse, your child’s schooling status and the daycare enrolment information. It is pretty simple and can be completed in less than 15 minutes. All you need is a payslip for yourself and your spouse to calculate family income.

While filling in Family Income estimate section, I normally use Pay Calculator to quickly get the annual figures for taxable income and super contributions. It’s super easy to use and highly accurate. Highly recommended!

One important point thing to remember when completing Child Care Subsidy Assessment: If you have changed the child care during the year, you may see current as well as past childcare listed in the assessment.

In that case, click on the review button for the earlier childcare and mark it as incorrect. This is important otherwise your child care subsidy might be incorrectly paid to the earlier centre as well.

Once you complete assessment, in a week or so Centrelink will send you a letter stating that your assessment is finalised. If you have marked any enrolments as incorrect during the assessment like me, you will have to go to Centrelink website and again review those enrolments. This time you will be presented with reasons why the enrolment details are incorrect. Select the appropriate reason and submit your declaration.

Apart from these Centrelink benefits, you can get a few more benefits such as Newstart Allowance or Parenting Payment. However, they have a long waiting period of 2 years. As such, they are not much help for the new migrants.

To sum it up, move to Australia before July 2018 if you can. From July 2018 you will face longer waiting period as the rules are going to change. Though these changes are unfair to the newly arrived expats, Australian government looks determined to implement them. Good luck!