This guide covers the 2025-26 income year (1 July 2025 to 30 June 2026) and claims lodged or balanced in 2026. Amounts are in AUD. Always confirm current thresholds with the ATO and Services Australia before you lodge.
Key Takeaways
- Family Tax Benefit and Child Care Subsidy are Services Australia payments, not tax deductions.
- Eligibility turns on income, residency, care share, child age and work or study status.
- Food, clothing, school costs and private childcare are not deductible just because they relate to a child.
- Keep care percentages, provider details, receipts and income records before you lodge or confirm.
Which Australian family benefits and tax offsets may apply to parents?
Start with the vocabulary, because the mix-up between these terms causes most errors.
- Deduction: reduces your taxable income.
- Offset: reduces the tax you owe. Most are non-refundable.
- FTB and CCS: family payments assessed and balanced by Services Australia, separately from your tax assessment.
A payment maximum is never a deduction maximum.
Family Tax Benefit Part A and Part B
Part A is paid per child. From 1 July 2025 the maximum rates are:
- $227.36 per fortnight for a child under 13
- $295.82 per fortnight for ages 13-15 (and eligible secondary students aged 16-19)
The maximum-rate income-free area is $66,722. The annual supplement is up to $938.05 per child, unavailable once family adjusted taxable income exceeds $80,000.
Part B supports single parents, non-parent carers and couples with one main income. The maximum is $193.34 per fortnight where the youngest child is under 5, and $134.96 where the youngest is 5 or older. Couples generally need a child under 13.
FTB generally needs at least 35% care. Care of 14%-34% does not qualify.
Child Care Subsidy
CCS is childcare assistance, not a deduction. It pays a percentage of the lower of your actual hourly fee or the hourly cap.
You receive 90% at family income up to $85,279, tapering to 0% at $535,279. The 2025-26 centre-based day care cap is $14.63 per hour for children below school age.
From 5 January 2026, the 3 Day Guarantee gives eligible families at least 72 subsidised hours a fortnight. It does not guarantee a place.
Offsets and levies on the tax return
- Low Income Tax Offset: up to $700, applied automatically on lodgement.
- Medicare levy family reduction: the lower family threshold is $47,238, plus $4,338 per dependent child.
- Invalid and invalid carer offset: for specific disability and carer circumstances, not a general child offset.
- Dependent spouse offset: abolished in 2014.
When circumstances change
Separation, a new partner, a newborn, shared care and work or study changes can all alter your entitlement. Report them promptly through your Centrelink online account, because payments can shift during the year.
How do childcare, parental leave and work-related costs affect tax?
Parents often assume childcare is deductible because it lets them work. ATO guidance says it isn't. Childcare, babysitting, nannies and before or after-school care are private expenses.
Childcare gap and employer arrangements
Child Care Subsidy (CCS) reduces the bill, but the remaining gap does not become deductible. Treat employer arrangements carefully:
- The fringe benefits tax business-premises exemption has specific conditions. Paying an external provider doesn't automatically qualify.
- CCS isn't available for a fee portion your employer is liable for under a salary-sacrifice arrangement.
- You can't deduct a cost your employer paid or reimbursed.
Parental leave
Government Paid Parental Leave for 2025-26 is $948.10 per five-day week ($189.62 per day). For births or adoptions from 1 July 2025, it runs up to 24 weeks. It is taxable.
Services Australia generally withholds 15%, though you can ask for a different rate. Employer-paid parental leave is also taxable. For eligible births from 1 July 2025, a 12% superannuation contribution is paid by the ATO after the financial year.
Dad and Partner Pay closed in June 2024 and now sits within the expanded scheme.
Self-employed parents
Having a business doesn't turn family costs into business expenses. The ATO's own example: Troy, a single father working two jobs, can't deduct his twins' private school fees. The same logic applies to sole traders. Only expenses that genuinely relate to earning business income qualify, and private use must be excluded.
A quick decision process
- Who paid the cost: you, your employer or a subsidy?
- Did you receive CCS or a reimbursement?
- Does the cost directly relate to earning income?
- Which agency administers the benefit?
- What evidence will you retain?
What education, medical and disability-related support can parents claim?
The dividing line is between the cost of raising a child and an expense that meets a specific rule.
Education
There is no general deduction for school or tertiary fees, uniforms, extracurriculars or school travel. A parent's own study may qualify if it connects to current work. HECS-HELP tuition and HELP repayments aren't deductible.
Student support is the student's entitlement, not the parent's. Youth Allowance, ABSTUDY and the Student Start-up Loan go to eligible students. The Schoolkids Bonus ended in 2016.
FTB Part A extends only to eligible secondary study through age 19. It isn't a general payment for a university-age dependant.
Medical, dental and therapy costs
A receipt alone doesn't make a cost deductible. Key limits include:
- Ordinary medical, dental and therapy expenses generally aren't deductible
- The net medical expenses offset ended on 1 July 2019
- A child's diagnosis alone doesn't establish a Medicare levy exemption
Disability and care support
- NDIS: participant payments are exempt income, but costs funded by them aren't deductible.
- Carer Payment and Carer Allowance: support payments for eligible carers, not expense deductions.
- Child Disability Assistance Payment and Carer Supplement: annual payments for qualifying recipients, not expense deductions.
The student, the carer and the NDIS participant may be different claimants. Don't merge their entitlements.
Can parents claim deductions connected with the family home?
Private home costs generally aren't deductible. Mortgage interest, ordinary renovations and a child's bedroom don't qualify. Income-producing use is the exception, and any claim must exclude private use.
Working from home
Two methods apply for 2025-26:
- Fixed rate: 70 cents per hour, covering energy, phone, internet, stationery and consumables. You need actual hours for the whole year.
- Actual cost: real costs with a reasonable work-use calculation. A continuous four-week representative diary can support your hours.
A four-week diary does not satisfy the fixed-rate method's whole-year record.
Occupancy costs
Claims for mortgage interest, rent and rates generally need a genuine place of business. The ATO contrasts Alex, whose attached workshop is used almost exclusively for business (a 10% floor-area claim), with Harper, whose dining-table bookkeeping supports no occupancy deduction.
Capital gains tax
Business use can reduce your main-residence exemption. Entitlement to deduct interest still matters for CGT even if you never claimed it. The absence rule can preserve main-residence treatment for up to six years of income-producing use, subject to conditions. Get professional advice for mixed-use or long rental situations.
How should parents prepare and claim benefits for 2026?
Work through this checklist before lodging your tax return or confirming income with Services Australia.
Records to gather
- Income statements and Services Australia notices
- Childcare statements and provider details
- Care-percentage and shared-care evidence
- Medical or disability documentation
- Home-office hours and calculations
- Business records, where relevant
The ATO generally requires records for five years after lodging, with longer periods for some asset and CGT records. Services Australia has its own evidence needs, so don't assume the same rule applies.
What goes where
- ATO (myTax): income, deductions, offsets and Medicare levy items.
- Services Australia: income estimates, care changes and family circumstances.
- Keep on file: receipts and supporting evidence.
The first FTB and CCS income-confirmation deadline for 2025-26 is 30 June 2027. It isn't an extension of your tax return deadline.
Do-not-double-claim review
- Subsidised or reimbursed amounts
- Salary-sacrificed employer childcare
- Shared-care claims
- Expenses already counted in another deduction, including GST credits
When to get advice
Seek professional help if you are:
- Self-employed
- Separated
- A non-resident or dual resident
- Earning overseas income
- Running a business while claiming family payments
Tax residency and family-payment residency are separate tests.
Parents who own businesses, or who have Australian-India cross-border tax matters, can speak with VJM Global's tax and advisory professionals. The firm handles Australian entity formation, tax, payroll, accounting and compliance, plus India-specific FEMA matters. The Australia-India treaty addresses dual residence and double taxation, but it is not a blanket exemption for Indian income.
Frequently Asked Questions
What deductions are available for dependents?
There's no general deduction for supporting a dependent. Look instead at family payments, specific offsets such as the invalid and carer offset, and situation-specific claims. Each has its own eligibility checks.
What is the maximum deduction for a family home?
A private home has no standard maximum. Only genuine work-related or income-producing costs qualify, after apportioning private use. Capital gains implications may follow.
What tax benefits are available to parents in Australia in 2026?
The main categories are Family Tax Benefit, Child Care Subsidy, taxable Paid Parental Leave, offsets such as the Low Income Tax Offset, and narrow deductions. Check current thresholds on the ATO and Services Australia sites.
Can I claim childcare costs as a tax deduction?
Generally no, even if childcare lets you work. CCS reduces the bill but isn't a deduction. Check your employer and business circumstances separately.
How does Family Tax Benefit affect my tax return?
FTB is a separate Services Australia process using income estimates, advance payments and year-end balancing. Your tax return income feeds that balancing, but the final result depends on your family's circumstances.
What records do parents need to keep?
Keep income, childcare, benefit, care-arrangement, medical, home-office and business records. The ATO generally requires five years after lodging, and Services Australia has its own evidence requirements.
