Nanny vs Child Care

Am I Financially Better off Employing a Nanny?

In 2018, there were substantial changes to child care benefits and child care rebates. These were replaced by the Child Care Subsidy which is determined by three separate tests detailed below.

These changes were designed to increase assistance for lower income households and accordingly reduce benefits for those families on higher incomes. Putting aside political bias and welfare/education opinions, some families may be financially better off employing a nanny.

Cost of a Nanny

As a starting point ‘Live in’ nannies often range between $250 to $400 per week (Plus food and board) Nannies that have experience may charge a higher rate that can range from $350 to well over $1,000 a week. A nanny that doesn’t live in the home may simply charge an hourly rate often in the range of $18-$25 per hour.

Cost of Child Care (Long day care at a Child Care Centre)

Once again the cost of child care can vary greatly with some rates as low as $80 per day all the way up to over $170 per day. The actual cost will then be determined by your eligibility to receive the child care subsidy which is calculated by applying the following 3 tests (Note: For families earning $185,710 and $350,000 this is capped at $10,000 per child).

  1. Combined family income
  2. Activity level of parents
  3. The type of child care service

Test 1: Combined Family Income:

Combined family income^Subsidy rate*
Up to $65,71085%
Over $65,710 to under $170,710Gradually reducing to 50%
$170,710 to under $250,00050%
$250,000 to under $340,000Gradually reducing to 20%
$340,000 to under $350,00020%
$350,000 or more0%

^ These figures increased by the Consumer Price Index (CPI) when the package began in July 2018.

* Subsidy rate of actual fee charged or the maximum hourly rate cap (whichever is lower).

Test 2: Activity Level of Parents

There is also an activity test for parents that caps the maximum number of subsidised hours as per the table below. Note there are a range of recognised activities as well as some exemptions.

StepHours of activity*Maximum number of hours of subsidy per child*
18 hours to 16 hours36 hours
2More than 16 hours to 48 hours72 hours
3More than 48 hours100 hours

*Per fortnight

Test 3: Service Type

The Government will subsidise child care based on the type of service received.

Service TypeRate Cap
Centre Based Day care (Long day care and occasional care)$11.55 max hourly rate cap
Family Day Care$10.70 max hourly rate cap
Outside school hours care (Before, After and Vacation care)$10.10 max hourly rate cap

Every household will vary slightly depending on their unique circumstance however for families on higher incomes it is certainly worth considering alternative options. There are numerous calculators available online to calculate what subsidy you are entitled. Talk to one of our Financial Specialists to find out the best option for you, complete your details below and we’ll be in touch or give us a call on (03) 9835 8200.


The information provided in this blog is general in nature. It has been prepared without taking into account any person’s individual objectives, financial situation or needs.

Before acting on any information in this blog, you should consider its appropriateness to you, having regard to your objectives, financial situation and needs or seek professional advice from a financial advisor.

About the Author
Richard Addison
Richard has had a passion for finance his whole life and has thoroughly enjoyed building his extensive knowledge to benefit his valued clients. He is very proud to work amongst a great network of trusted colleagues and believes that innovation is the key to success!
Want to join the team?