A gap fee rises when one of three things changes: the fee, the subsidy rate, or the hours the subsidy covers. Every cause below works through one of those. Some are changes at the centre, some are changes in your family's circumstances, and some are calendar effects that arrive on their own.
The gap fee is what is left after Child Care Subsidy (CCS) is taken off the fee. CCS is worked out, for each session, as a percentage of the lower of the centre's hourly fee and the hourly rate cap, for hours within your fortnightly limit, less an amount held back until the year is balanced.
1. The centre raised its fee
Centres set their own fees and can change them. How much of a rise reaches you depends on where the fee sits against the hourly cap:
- Fee at or below the cap. CCS covers your usual percentage of the rise, and you pay the rest. At the 90% maximum rate, that is a small share of the increase.
- Fee above the cap, or pushed above it by the rise. The part above the cap gets no subsidy, so you pay all of it.
The hourly cap is indexed once a year, at the start of the financial year, separately from any centre's fees. A fee rise at any other time of year is not matched by a cap rise, and a fee rise larger than the cap's indexation widens the unsubsidised part.
For 2026-27, the cap for centre-based day care for a child below school age is $15.19 an hour. The hourly cap guide has the caps for every care type.
2. Your child started school
The hourly cap is lower for school-age children in centre-based care and outside school hours care (OOSH):
| Care type | Below school age | School age |
|---|---|---|
| Centre-based day care | $15.19 | $13.30 |
| Outside school hours care | $15.19 | $13.30 |
| Family day care | $14.08 | $14.08 |
If the hourly fee stays the same but the cap drops, more of the fee sits above the cap and the gap fee goes up.
3. Your subsidy rate went down
The standard CCS rate is set by family adjusted taxable income (ATI) — both partners' ATI added together in a couple. Up to $88,520, it is 90%. Above that it falls by one percentage point for every $5,000 of family ATI, reaching zero at $538,520.
During the year, Centrelink pays CCS on your family income estimate. If the estimate was updated — a pay rise, a partner returning to work, overtime or a bonus — the rate is recalculated and the gap fee rises from then on. What income to tell Centrelink and does overtime or a bonus affect CCS? cover this.
A higher gap fee after an update reflects the rate you are entitled to. If the estimate stays too low, the difference is recovered after the year ends — see CCS reconciliation explained.
4. The higher rate for a younger child ended
Families with two or more children aged 5 or under in care get a higher rate, up to 95%, for the younger children. The eldest child in that group gets the standard rate.
That higher rate stops for the younger child when:
- the older child turns 6, leaving the group, or
- the older child leaves care, for example on starting school without before or after school care.
With only one child aged 5 or under left in care, that child moves to the standard rate. Higher CCS for a second child has the full rules.
5. Your subsidised hours went down, or your care went up
The activity test sets how many hours of care are subsidised for each child each fortnight:
- 72 hours under the 3 Day Guarantee, for every eligible family
- 100 hours when each parent does more than 48 hours of recognised participation a fortnight, or has an exemption
Hours beyond the limit get no subsidy. So the gap fee can jump if:
- a parent's work, study or other activity dropped to 48 hours or fewer a fortnight, taking the family from 100 hours to 72
- you added a day, or moved to longer sessions, so the booked hours now go past your limit
Session hours count against the limit even when the child is picked up early. The 3 Day Guarantee guide explains both levels.
6. Your child used up their absence days
Each child has 42 absence days a financial year that still attract CCS — sick days, holidays and public holidays when the child is booked in. From the next absent day, that day gets no subsidy and you pay the full fee. The allowance resets each 1 July.
Additional absences can be approved in some circumstances, such as illness with a medical certificate. CCS absences and holidays covers what counts.
7. The withholding amount
Centrelink holds back 5% of each CCS payment by default, and pays the rest to your provider. So the gap fee you see is a little higher than the rate alone suggests. The withheld amount is paid back, or used against any amount owed, when the year is balanced.
You can choose a higher withholding rate through myGov. If you (or your partner) did, a higher gap fee each fortnight is the result — with a larger amount held back for the end of the year.
Working out which one it is
Three questions narrow it down:
- Did the fee change? A notice from the centre about new fees points to cause 1. A child starting school points to cause 2, even with the fee unchanged.
- Did your CCS percentage change? Your Centrelink notice shows the percentage rate. A lower one points to cause 3 or 4.
- Did your hours change? A drop in either parent's work or study, longer sessions, an added day or a run of absences points to cause 5 or 6.
If none of these changed, check the withholding setting in myGov.
How NestWise helps
The free CCS calculator works through the fee, the hourly cap for your child's age and care type, your income-tested rate, the higher rate for younger siblings, your subsidised hours and the withholding. Enter the old and the new details and you can see which change moved your gap fee, and by how much.
Sources: Services Australia — Child Care Subsidy hourly rate caps, Services Australia — Balancing Child Care Subsidy, DSS Family Assistance Guide §3.5 — Child Care Subsidy.