can you use childcare while on parental leave?
last updated: november 2025
catherine alderstein is an early childhood policy researcher and mother of two from Melbourne. she covers government payments, childcare policy, and family economics for mini mode.
you're expecting another baby and your toddler is already in childcare. the question every parent in this situation asks: can I keep them in care while I'm on parental leave? and will I still get the Child Care Subsidy?
the answer to both is yes — but the details matter. your subsidy entitlement shifts during parental leave, and understanding exactly how will help you plan your budget and your childcare arrangements.
yes, you can use childcare on parental leave
there's no rule that says you have to pull your child out of care when you go on parental leave. your older child can keep attending their centre while you're home with the new baby.
in fact, keeping your child in care during this period is often the best move for everyone. your toddler gets routine and social interaction. you get time to recover and bond with the newborn without managing both kids solo every day.
the government doesn't penalise you for using childcare during parental leave. your entitlement to the Child Care Subsidy continues — though the number of subsidised hours may change based on the activity test.
how parental leave affects the activity test
when you're on parental leave, you're not working — so your activity hours drop. in a two-parent family, the activity test uses the lower earner's activity level. if you're the lower earner and you're on leave, your activity hours could be zero.
from 1 january 2026, this matters less than it used to. the three day guaranteemeans every family gets at least 30 hours of subsidised care per fortnight — no activity test needed. that's enough for three days a week of childcare for your older child.
if your child was previously attending four or five days, you may want to temporarily reduce to three days during your leave to stay within the guaranteed hours. alternatively, if your partner works full-time and you can demonstrate some activity (even a few hours of study or volunteering), you may qualify for more.
the activity test also recognises a temporary exemptionin some circumstances. if you've recently given birth, you may be granted a temporary activity test exemption of up to 12 weeks. contact Centrelink to check if this applies to your situation.
what happens to your CCS rate
your CCS percentage is determined by your combined family income(ATI) for the financial year. during parental leave, your income is typically lower — especially if you're receiving Paid Parental Leave at the national minimum wage rate of $183.82 per day (2025-26) instead of your usual salary.
lower family income can mean a higherCCS rate. if your combined ATI drops below $83,280, you'll receive the maximum 90% subsidy. families earning up to around $140,000 still receive a substantial subsidy.
the catch: CCS uses your income estimate for the full financial year, not just the months you're on leave. if you earned a full salary for six months and were on leave for six, your annual ATI is an average of both periods. update your income estimate through myGov when your circumstances change so your CCS payments are accurate during the year.
use our Child Care Subsidy calculator to estimate your rate based on your expected annual income during leave.
keeping your childcare place
this is the practical reason most parents keep their child in care during leave: losing your place can be costly. waitlists at popular centres run 6 to 18 months in many areas. if you withdraw your child and try to re-enrol later, you may not get a spot when you need it.
most centres will let you reduce days temporarily. if your child currently attends five days, dropping to two or three during your leave keeps the enrolment active at a lower cost. talk to your centre director about your options — many are flexible about temporary changes.
keep in mind that if your child doesn't attend on a booked day, you'll still be charged — and you can still claim CCS for absence days (up to 42 per year before additional evidence is required).
Paid Parental Leave and CCS together
you can receive Paid Parental Leave and the Child Care Subsidy at the same time. they're separate payments with separate eligibility rules.
PPL provides up to 22 weeks(110 payable days) at the national minimum wage rate of $183.82 per day before tax. both parents can share the PPL entitlement. PPL is taxable income and counts toward your ATI for CCS purposes — but since it's typically less than your normal salary, your overall ATI for the year may still be lower.
check your PPL entitlement with our Paid Parental Leave calculator, and see how your income during leave affects your CCS with the CCS calculator.
frequently asked questions
can I use childcare while on parental leave?
yes. there's no restriction on using childcare during parental leave. your Child Care Subsidy continues, though subsidised hours may change based on the activity test. the three day guarantee provides 30 hours per fortnight regardless.
what happens to my CCS when I go on parental leave?
your CCS rate may increase if your family income drops during leave. your subsidised hours depend on the activity test — the three day guarantee covers the first 30 hours per fortnight without any activity requirement.
should I keep my childcare place during parental leave?
usually yes. waitlists can be 6 to 18 months at popular centres. consider reducing days temporarily rather than withdrawing completely. talk to your centre about flexible arrangements during your leave.
does Paid Parental Leave count as income for CCS?
yes, PPL is taxable and included in your ATI. but since it's paid at the minimum wage rate ($183.82/day in 2025-26), your total family income for the year is often lower than usual, which can increase your CCS rate.
next steps
planning ahead makes the transition smoother. talk to your centre about reducing days, update your income estimate on myGov, and check whether you qualify for a temporary activity test exemption through Centrelink.