Yes — being on parental leave does not stop Child Care Subsidy (CCS). For the CCS activity test, parental leave counts as recognised participation, and it is assessed at the hours you did before the leave began. For a family with an older child in care, the subsidy for that child continues through the leave, and the leave itself is not treated as "no activity".
What changes is less about the hours and more about the income. Parental Leave Pay (PPL) is taxable income, and it shows up in the income figure your CCS percentage is based on.
How parental leave counts for the activity test
The activity test — renamed "recognised participation" from 5 January 2026 — sets the maximum number of subsidised hours your family can use each fortnight per child. Paid work, study, volunteering and looking for work all count. So does approved leave from work, including parental leave, paid or unpaid.
The detail that matters: it counts at your pre-leave hours. Centrelink does not treat you as doing zero hours because you are at home with a baby. It looks at what you were doing before the leave.
- Pre-leave recognised participation above 48 hours a fortnight — you count as clearing the threshold for the higher level.
- Pre-leave recognised participation of 48 hours a fortnight or less — you count toward the 3 Day Guarantee level.
For the full list of what counts, see the CCS activity test guide.
The two levels, and the 3 Day Guarantee
Since 5 January 2026 there are two levels of subsidised hours per fortnight:
| Recognised participation per fortnight | Subsidised hours per fortnight |
|---|---|
| Up to and including 48 hours | 72 hours (3 Day Guarantee) |
| More than 48 hours | 100 hours |
The 3 Day Guarantee means every eligible family receives at least 72 subsidised hours per fortnight, whatever either parent is doing. So even if your pre-leave hours were low, a child in care keeps a subsidised floor through your leave.
For a couple, each parent needs more than 48 hours to reach 100 hours. The parent with fewer hours sets the family's level. If you are on leave and your partner is working, your pre-leave hours and your partner's current hours are what Centrelink compares.
Parental Leave Pay and your CCS percentage
Your CCS percentage is set by combined family adjusted taxable income (ATI) for the financial year. Parental Leave Pay is taxable income, so it counts toward ATI in the year it is paid. The guide to Paid Parental Leave after tax covers the tax side in more detail.
A leave year usually looks different from a working year. It tends to be a mix of:
- wages earned before the leave started
- any employer-paid parental leave
- Parental Leave Pay from the government
- any unpaid weeks
- wages after you return
Your CCS income estimate for that financial year needs to reflect that mix, not last year's salary. An estimate that is too low produces a larger fortnightly subsidy and can produce a debt at reconciliation. An estimate that is too high produces a smaller fortnightly subsidy and a top-up afterwards. The guide on what income to tell Centrelink for CCS walks through estimating a year like this, and adjusted taxable income explained covers what counts.
When your leave ends
When parental leave finishes, your activity is looked at again based on what you are doing from then on — returning to work, study, volunteering or another recognised activity.
- Back to more than 48 hours a fortnight — the higher level can continue.
- Back at fewer hours, or not yet back — your family sits at the 72-hour 3 Day Guarantee.
It is worth looking at this before your leave ends, not after. If you are planning a gradual return, or care days will increase when you go back, the change in hours and the change in income both move your out-of-pocket fees. Updating your activity details and income estimate with Centrelink at the point of return keeps the fortnightly subsidy close to your actual entitlement.
The newborn
If you have an older child in care during the leave, the rules above apply to them. If the new baby later starts care too, the family's income and activity assessment covers both children, and a second child under six in care may attract a higher rate — see the higher CCS rate for a second child.
Separately, the Newborn Supplement and Parental Leave Pay cannot both be paid for the same child. That is a Family Tax Benefit rule, not a Child Care Subsidy one, and the Newborn Supplement guide explains it.
In short
- Parental leave, paid or unpaid, counts as recognised participation for CCS, at your pre-leave hours.
- Every eligible family receives at least 72 subsidised hours per fortnight.
- Parental Leave Pay counts toward adjusted taxable income, so it belongs in your CCS income estimate for that year.
- When leave ends, activity is assessed again on what you do next.
Services Australia sets out the recognised participation rules at servicesaustralia.gov.au/child-care-subsidy.