Thousands of families rushing to file their tax returns could be hit with a surprise debt instead of an expected tax offset as the federal government begins reviewing parents’ incomes for the last financial year to check they received the correct amount of childcare subsidy.
The childcare sector is bracing for a flood of upset and confused parents, with about a third of the 1.1 million families who receive the childcare subsidy predicted to have been overpaid for the previous financial year.
Under the new childcare payment system, introduced in July 2018, parents estimate their annual income through myGov, and this is used to determine how much childcare subsidy they are eligible to receive. From the end of the month, the Department of Human Services will begin a “balancing” process, where it will compare parents’ self-estimated income for 2018-19, with the actual income in their tax returns.
Five per cent of families’ entitlements are kept back by the government during the year to try and cover any potential discrepancies, but childcare sector experts say this amount will not cover all families. One expert warned many families – who were expecting financial relief at tax time, due to the Morrison government’s $1080 tax offset – were about to be “bitch-slapped”.