How Does Child Care Subsidy Work? Understanding Your CCS Percentage

If you've been told you're eligible for 80% Child Care Subsidy (CCS), you might reasonably assume that means the government pays 80% of your child care fee.

But that's not always how the calculation works.

Your CCS percentage is applied to either your child care service's hourly fee or the Australian Government's hourly rate cap, whichever is lower.

Understanding this difference can make it much easier to estimate what you'll actually pay for child care.

At Sanctuary Early Learning Adventure, we know CCS can feel complicated. So, let's break it down in a way that makes sense.

What is Child Care Subsidy?

Child Care Subsidy, commonly called CCS, is an Australian Government subsidy that helps eligible families with the cost of approved child care.

The amount of CCS your family receives depends on your individual circumstances, including your family income, the type of approved care you use, the age of your child, your circumstances and the number of children you have in care.



Your CCS is generally paid directly to your child care service, reducing the amount your family pays.

Why isn't my CCS percentage taken off my full child care fee?

This is one of the most common points of confusion for families.

Your CCS percentage doesn't necessarily apply to your centre's full daily fee.

Instead, your CCS percentage applies to the lower of:

• your service's hourly fee; or
• the Australian Government's CCS hourly rate cap.

For Centre Based Day Care, which includes long day care, the 2026–27 hourly rate cap for children below school age is $15.19 per hour.

The Australian Government reviews the hourly rate cap each year, so this figure can change.

How is Child Care Subsidy calculated?

Let’s look at a simple example.

Imagine a childcare centre charges $158 per day for a 10-hour session.

Step 1: Work Out the hourly fee

A $158 daily fee divided across a 10-hour session is:

$158 ÷ 10 = $15.80 per hour

The 2026–27 government hourly rate cap for Centre Based Day Care for a child below school age is $15.19. Because the service's hourly fee is higher than the government cap, CCS is calculated using the $15.19 hourly cap.

Step 2: Work out the amount ccs can be applied to

For a 10-hour session:

$15.19 × 10 hours = $151.90

This is the amount the family's CCS percentage is applied to in this example.

Step 3: Apply the family's ccs percentage

For a family receiving 80% CCS:

80% of $151.90 = $121.52



In this simplified example, $121.52 would be the subsidy before taking into account factors such as the standard CCS withholding.

Step 4: Understand the gap

The full daily fee is $158.

If $121.52 is subsidised, the remaining amount is:

$158 − $121.52 = $36.48

So even though this family has an 80% CCS rate, they don't simply receive 80% off the $158 daily fee.



That's because their CCS percentage is being applied to the government hourly rate cap rather than the full service fee.

Why might the ccs amount on my statement look different?

There are several reasons the subsidy shown on your statement may differ from a simple calculation.

For example, Services Australia generally withholds 5% of your CCS to help reduce the risk of an overpayment when your entitlement is balanced.

Your actual subsidy can also be affected by your individual circumstances, subsidised hours, family income estimate and other factors.



This is why online examples are useful for understanding how CCS works, but they shouldn't be treated as a quote for what your individual family will pay.

What is the three-day guarantee

From 5 January 2026, all CCS-eligible families can access at least 72 hours of subsidised child care per child, per fortnight.

This is known as the 3 Day Guarantee.

It replaced the previous activity test arrangements that determined access to subsidised hours.

Some families can receive 100 hours of subsidised child care per fortnight, including families who meet certain participation requirements and Aboriginal and/or Torres Strait Islander families.

Importantly, the 3 Day Guarantee refers to the number of hours that can be subsidised. It doesn't mean child care is free for three days, nor does it guarantee that a place is available at a particular child care service.

Families must still meet CCS eligibility requirements and generally pay a gap fee.

How is my CCS percentage determined?

Your CCS percentage is primarily determined by your family's income.

For the 2026–27 financial year, families with income of up to $88,520 can receive a standard CCS rate of 90%.

For family income above $88,520 and below $538,520, the standard subsidy gradually reduces as income increases.

Families with more than one CCS-eligible child aged five or younger may also receive a higher subsidy for their second and younger children, depending on their family income and circumstances.

Because every family's circumstances are different, Services Australia is the best source for confirming your individual CCS entitlement.

How many hours of subsidised care can i receive?

CCS-eligible families can receive at least 72 hours of subsidised care per child each fortnight under the 3 Day Guarantee.

Eligible families can receive 100 hours per fortnight in certain circumstances.

Your number of subsidised hours is separate from your CCS percentage.

That's an important distinction:

Your CCS percentage helps determine how much of the eligible hourly fee is subsidised. Your subsidised hours determine how many hours of care can receive that subsidy. Together, these help determine your family's overall CCS entitlement.

Why do child care fees sometimes exceed the CCS hourly rate cap?

The CCS hourly rate cap is not a maximum fee that child care services are allowed to charge.

The Australian Government doesn't set the fees charged by early childhood education and care services.



When comparing child care fees, it can therefore be helpful to look at what is included in the daily fee as well as the out-of-pocket cost after CCS.

Depending on the service, fees may include things such as:

• meals and snacks
• nappies and wipes
• learning experiences and programs
• incursions or excursions
• Kindergarten programs
• resources and other everyday inclusions.

At Sanctuary Early Learning Adventure, our daily fees include many of the everyday essentials families need, helping make the cost of care clearer from the beginning.

How can I estimate my out-of-pocket childcare costs?

Your actual out-of-pocket cost will depend on your family's individual CCS entitlement and the fees charged by your chosen service.

When comparing child care, consider asking:

• What is the daily or session fee?
• How many hours are included in the session?
• What is included in the fee?
• How will my CCS percentage apply?
• How many subsidised hours am I entitled to?
• What will my estimated weekly out-of-pocket cost be?



Services Australia's CCS information and official calculators can help you estimate your entitlement before enrolling.

Need help understanding your child care fees?

CCS can feel complicated, particularly when you're comparing child care options and trying to understand what each service will actually cost your family.

Our Sanctuary teams can help explain our fees, session structure and inclusions and show you how your CCS entitlement may apply to your booking.

Your individual CCS entitlement is determined by Services Australia, so we always recommend confirming your circumstances and current entitlement directly with them.



Understanding the numbers means you can spend less time trying to decipher percentages and more time considering what really matters: finding an early learning environment where your child and family feel comfortable, supported and at home.

Further information about Child Care Subsidy

CCS rates, income thresholds and hourly rate caps can change, so families should always check current information with Services Australia and the Australian Government Department of Education.

Information in this article is current for the 2026–27 financial year and is general information only. Your family's actual CCS entitlement and out-of-pocket costs will depend on your individual circumstances.