The Australian Government is deploying a range of new integrity measures to ensure the early childhood education and care system is on strong and sustainable foundations for future reform.
These measures will deter and detect those seeking to misuse Child Care Subsidy (CCS). Strengthening the payment and accuracy of CCS will net savings of $410.7 million over 4 years for reinvestment in education priorities.
Read the ministers’ media release on the 2024–25 Budget
Direct collection of gap fees from 1 July 2025
Family Day Care (FDC) and In Home Care (IHC) play a vital role in the ECEC sector. They are particularly valued for delivering flexible care:
- for parents who work non-standard hours
- in home environments
- in regional and remote and disadvantaged areas
- for culturally and linguistically diverse families.
From 1 July 2025, FDC and IHC providers must collect gap fees directly from families. This means that educators in these services will no longer collect the gap fee themselves.
The measure will strengthen the sector, ensuring FDC and IHC can continue to play a vital role in the sector into the future, by:
- freeing educators up from chasing fees, so they can focus on providing care
- reducing the number of services removed from the sector for misusing CCS.
This measure will improve FDC and IHC providers’ ability to correctly administer CCS:
- giving families, governments and regulators confidence in the sectors’ viability
- encouraging sector growth, particularly in areas that need more child care services.
Many FDC and IHC providers already directly collect gap fees. For those that don’t yet, the department is partnering with peak bodies and support agencies to provide practical support to providers as they transition to this new approach to fee collection.
Fit and proper requirements from 1 April 2025
From 1 April 2025, providers applying for CCS approval will need to provide a satisfactory statement of tax record (STR). Some existing providers may also be asked to show an STR.
To maintain CCS approval, providers must be considered fit and proper to handle public money. The fit and proper test is an existing and long-standing requirement for ongoing CCS approval.
From April next year, a provider’s engagement with the Australian tax system with certain tax obligations will be considered as part of the fit and proper assessment.
An STR shows whether a provider’s engagement with the Australian tax system is satisfactory.
A satisfactory STR shows that a provider:
- is up to date with registration requirements, which may include:
- being registered for an Australian business number and GST
- having a tax file number.
- has lodged at least 90% (of each lodgement type) of their obligations due in the last 4 years of operation (from the date of request for an STR), including:
- tax returns
- business activity statements
- fringe benefits tax returns.
- needs to pay any undisputed debt of $10,000 or greater by the due date or have a payment plan in place with the ATO.
Reasonable delays in lodgements due to extensions agreed to by the ATO will not affect a provider from receiving a satisfactory STR.
Streamline and expand compliance monitoring and detection
In addition to the new measures above, the department will also:
- bolster education, audit and compliance activities
- partner with AUSTRAC, Services Australia and state/territory agencies to identify fraud and non-compliance and take action.
The measures will deliver savings of $410.7 million over the next 4 years. Savings from this measure will be redirected to support other education policy priorities.
We will provide more detail, information and resources in the coming months. Subscribe to our weekly newsletter and join our Facebook Group to get updates.