Foster Care Allowance Victoria: Rates, Extras, and the Financial Reality

Money is one of the most searched-for topics among people considering fostering in Victoria — and one of the least honestly discussed in official materials. The brochures talk about "financial support." What they don't say is that Victoria has the lowest care allowance rates in the country, or that the allowance isn't designed to cover all costs, or that many carers end up subsidising placements from their own income.

None of this should put you off fostering. But walking in with unrealistic expectations is one of the most common reasons carers become disillusioned and leave the system. Here's the full picture.

The Care Allowance: What It Is

Victoria's Care Allowance is a fortnightly, non-taxable payment from the Department of Families, Fairness and Housing (DFFH) to help cover the day-to-day costs of caring for a child. It's not a wage. It doesn't replace lost income from reduced work hours. It's a contribution to expenses like food, clothing, activities, and basic needs.

The allowance is calculated based on two factors: the child's age and the level of support they require. Support levels (1–3 for standard foster care, with Level 4 and 5 for exceptional need) reflect the complexity of the placement — a child with significant trauma histories or medical needs attracts a higher rate.

2024–25 Care Allowance Rates

The following rates are the current DFFH scheduled amounts for Victoria:

Most general foster care placements begin at Level 1 or Level 2. Level 3 is typically applied where a child has confirmed complex needs requiring higher-intensity support from the carer.

Higher-Level Allowances

For children with exceptional medical, behavioural, or disability-related needs, two additional levels exist:

• Level 4: $1,211.02 per fortnight (regardless of age)
• Level 5: $1,864.09 per fortnight (regardless of age)

These rates apply to Therapeutic Foster Care placements or cases where a child's needs are formally assessed as requiring intensive support. They're not the norm for first-time carers — agencies typically work with carers to build toward more complex placements as experience develops.

Additional Payments and Grants

Beyond the base Care Allowance, Victoria provides several supplementary payments:

School Attendance Allowance — An annual payment to assist with school fees, uniforms, and books. The amount ranges from approximately $411 to $617 per year depending on the child's age and school stage.

New Placement Loading — A one-off payment of $72.71 (at Level 1) when a child first arrives in your care, to help cover initial costs like bedding, clothing, or car seat hire. This loading scales with the care level — higher-level placements receive a proportionally larger initial payment.

Specific Medical or Equipment Needs — For children with diagnosed medical conditions or disabilities, additional funds may be approved by DFFH to cover items not covered by Medicare or NDIS. These are negotiated case by case.

Respite Care Allowance — Respite carers (who provide short-term relief to primary carers) receive a pro-rata allowance based on the same rate structure. If you're considering respite fostering — a lower-commitment entry point — you're still financially supported for the period of care.

How Care Allowances Interact with Centrelink and Tax

This is important to get right before you apply.

The Care Allowance is not taxable income. You do not need to include it in your tax return, and it does not affect your Medicare Levy calculations.

The Care Allowance does not affect Centrelink income tests. This means it won't reduce your Family Tax Benefit (FTB) payments or affect any means-tested payments you receive.

Family Tax Benefit eligibility — If a child has been in your long-term care for an extended period, you may be eligible to claim Family Tax Benefit Part A and Part B for that child. This is separate from the Care Allowance and worth checking with Services Australia if you move into a long-term or permanent arrangement.

You cannot claim tax deductions for expenses related to caring for a foster child — the allowance is treated as a non-assessable, non-exempt payment, which means it sits outside the tax system entirely.

The Real Financial Picture

The FCAV — the peak body for Victorian foster carers — has publicly noted that Victoria's care allowance rates are the lowest in the country. When you run the numbers against the actual cost of raising a child (including food, clothing, transport to school and medical appointments, activities, and incidentals), most Level 1 placements don't fully cover costs. Many experienced carers describe regularly spending $50–$150 per month of their own money, particularly in the first few weeks of a new placement.

This isn't unique to Victoria, but it is more pronounced here than in states like NSW or WA where allowances have been raised more substantially in recent years.

What this means practically:

• Financial stability is a genuine pre-requisite. The assessment process verifies that you have sufficient income to support your household independently. If you're already stretching your household budget, fostering at Level 1 will create financial stress.
• Workplace flexibility matters. Many carers reduce to part-time work after accepting placements. The Care Allowance won't replace a full salary. Build this into your planning.
• Higher support levels help. If you're able to take on placements with children who have more complex needs — which requires experience and additional training — the allowance rates at Level 3, 4, and 5 are more reflective of actual costs.

What Carers Consistently Wish They'd Known

People who've been through the Victorian system regularly raise a few financial points that the official materials don't address clearly:

First, there's often a gap between when a child arrives and when the first allowance payment is processed. Having a float of a few hundred dollars available when a new placement begins is practical rather than paranoid.

Second, school holiday periods are disproportionately expensive. Activities, childcare alternatives, and day programs for children who need structure all cost money that the school attendance allowance doesn't cover. Some agencies have discretionary funds for this — but you have to ask.

Third, if you're caring for a child with an NDIS plan, navigating the intersection of NDIS funding and DFFH support can be complicated and slow. Your CSO support worker should be able to help, but it's worth understanding that delays are common.

A clear financial picture before your first placement removes one of the biggest sources of early-stage carer attrition. The Victoria Foster Care Guide includes a worked example of typical monthly costs against allowance rates, plus guidance on accessing additional supports through your CSO and the FCAV.

See more Australia guides →