CCS have started balancing family accounts for the 2020-21 Financial Year.
Here's the affect it could have on your future billing cycles.
What is Balancing?
At the end of a financial year, the department looks at a family's confirmed income for that year and the CCS they received.
With this information, the department asks themselves two questions:
"How much CCS were the family entitled to?"
"How much CCS did the family receive?"
If the two don't match up - they almost never do perfectly - the department will rectify this by BALANCING the account (i.e. correcting any discrepancies).
If a family received less CCS than they were entitled to, the department will pay them back the outstanding fees in a lump sum.
If a family received more CCS than they were entitled to, the department will determine that the family owes money to the department.
How Does a Family Pay Back the Department?
It's quite common for families to owe money back to the department at the end of the CCS year. That's why CCS withholding is usually applied.
CCS will pay for the outstanding balance with the withholding amount.
But what happens if a family owes more than the withholding amount?
They have two options:
Pay the outstanding balance within 28 days
Start to get the amount deducted from future CCS payments (amongst others) after 28 days.
When deducting CCS, the department will take 50% of upcoming subsidies until the amount is restored.
Let's Look At An Example:
The Robinson Family were expected to earn roughly $72,000 - meaning they were receiving 85% CCS.
But they actually earned $177,000 - meaning they were only entitled to 50%.
During that year, the Robinson family received $8,500 in subsidies, but were only entitled to $5,000. This means they are $3,500 in debt to the department.
$500 of this is taken off from withholding, leaving a $3,000 debt.
If the Robinsons are due to pay $400 per week for their child's care receiving 50% CCS, they would normally get $200 in CCS, paying a gap fee of $200.
But because they owe $3,000 to CCS, they will only receive $100 of CCS, as the other $100 would go towards the debt to the department each week. This will carry on for 30 weeks, until the $3,000 debt is restored.
NOTE: this is an extreme example, used only for the fact that number numbers are easier to work with. Most families will see much lower discrepancies.
What This Means for Families
Families get the flexibility of choosing how to pay, and can defer payments to automatic deduction. However, deductions can also be made from Family Tax Benefits or Income Support Payments.
Whilst taking this from payments can seem like a better choice for some, those who are cash-strapped week-to-week will really feel the crunch when half of their government payments aren't coming in.
What This Means for Services
This is a hard one for services, because it's basically making the family owe more to the centre by taking away the CCS. For those who may be prone to racking up debt, it can simply shift debt from the department to the centre.
For services dealing with debt problems - either as a result of these measures or completely separate to them - OWNA offers a debt management service that comes with our OWNA Accounts Administration service.
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