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  • Writer's pictureJack Ritchie

Jargon Explained: What is CCS Withholding?

Updated: Mar 2, 2023

"My CCS should be higher than this"

Probably the most common CCS query from parents, and often a really simple answer - withholding.

But what is withholding?

To fully explain how withholding works and why it's put in place, it's best to talk about how CCS balancing works.

What Is CCS Balancing?

At the end of a financial year, parents and carers submit their tax returns or advise CentreLink about their income. This income is used to estimate how much CCS the family is entitled to the following year.

So the previous financial year ESTIMATES how much income the family will earn, but the income from the current year is what is used to BALANCE the account at the end of the current financial year.

This can get confusing, so let's use an example.

The Smith Family

  • The Smith family are applying for CCS for the first time. They have to use their income from 2020-21 Financial Year to ESTIMATE how much they'll get in 2021-22

  • At the end of the 2021-22 Financial Year, The Smith family will submit another tax return. The income earned from this year will be used to BALANCE the payments from 2021-22

  • If they wish to receive CCS in 2022-23, they'll use the 2021-22 income to estimate how much they'll get in 2022-23 and so on....

So What Is Withholding?

For most families, income may rise year-on-year.

Having an extra year of inflation, rising award rates and earning an extra year of experience in your relevant industry could lead to an increased salary.

Simply put, there's a chance you could end up earning more this year than you did last year. Meaning you could be entitled to less CCS than was estimated.

Because of this, the department withholds 5% of a family's CCS amount each week.

So if a family gets 60% CCS, they'll receive 57% (95% of 60) subsidy at the time of billing, and the remaining 3% (5% of 60) will be withheld by the department.

Withholding means that families won't be left with a large bill at the end of the financial year, which could cause a lot of distress for them.

How Withholding Works With Balancing

If overpayments of CCS have been made (i.e. you received more CCS than you were entitled to), the department will use the withholding amount to deduct from the subsidy.

If the overpayments are less than the withholding amount, they'll give the remaining balance back to the family, but if the overpayments are higher than the withholding amount, the family are liable for any excess.

If underpayments have been made, the family will receive their withholding amount, plus anything else they are owed.

Can Withholding Be Changed?

Families can change the withholding amount whenever they want, and can choose to pay no withholding at all. They may also choose to pay more withholding if they expect a significant lowering of CCS entitlements.

They can also amend their estimated income, so that their CCS estimate changes - and they can do at 2 intervals per year.

For more information on withholding, please visit the Services Australia website.

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