A closer look at the Activity Test
The idea of an activity test is simple enough - the Government looks at what you are doing, then decides how much it is going to help with the cost of childcare by offering to subsidise each hour up to a limit.
The complexity of the test is in 2 parts - firstly, there may be confusions over what activities are acceptable to satisfy the test - this is pretty easy to resolve if you know where to look.
The second issue is working out how to make the most of the hours - it’s very easy to end up paying for hours at full price - meaning the subsidy percentage is misleading. We show you how to find out below.
What is an “activity”?
For most people, the number of hours of work will be the simple answer to this test. However, if your situation needs more clarification, here are some good resources:
Services Australia has a simple list of activities.
The Department of Education, Skills and Employment has a larger list.
If you are still unsure, try the Australian Government Family Assistance Guide - which has a lot more detail on unpaid work, and when you are looking for work.
How many hours?
This is where it gets interesting, and confusing.
Services Australia outline the number of hours you get per fortnight, based on your activity. This is only part of the story.
The other important part of the story - and very important for your family budget, is understanding how many hours of childcare you will be getting the subsidy for.
To get to the bottom of this - you will need to know how many hours your childcare provider is charging you for each day.
Using an example from Services Australia:
Tom is eligible for 24 hours of subsidised child care per fortnight for his child, Liam. His child care provider charges a daily fee for a 12 hour session. If Tom sends Liam for 7 hours each day, his provider will still charge him for 12 hours. This means we’ll subsidise 2 days of child care per fortnight. Once he exceeds the 24 hours we won’t subsidise any extra hours.
A simplified way to solve the puzzle
In the table below, we have made a few simplifications to explain the challenge:
Fortnightly numbers have been converted to weekly numbers to be more easily understood.
Hours have been changed to days - assuming 8 hours is one day
Next up - we have compared child care providers offering different types of sessions. While your childcare provider may be open for 12 hours, they may allow you to use shorter sessions of 9 hours per day.
Consider some of the examples from the table:
Someone with 3 days of activity can have 4 days of subsidised care for providers offering a 9 hour session, and 3 days for providers offering a 12 hour session.
Someone working 5 days, needing 5 days of care will have all the days subsidised if their childcare provider offers 10 hour sessions, but for childcare providers only offering 12 hour session days, most of the 5th day will not be subsidised.
Not all childcare providers have flexibility in hours
If your childcare provider does not have the flexibility in the amount of hours you can choose to use, you may be paying for more childcare than you need.
There may be financial reasons for providers to be inflexible in the amount of care hours they offer. Read more here.