Parliament passes Direct Gap Fee legislation: Key changes for FDC and IHC from 1 January 2026

The Australian Government’s legislation for direct collection of Child Care Subsidy (CCS) gap fees has officially passed Parliament, marking a significant shift in administrative and financial responsibilities for Family Day Care (FDC) and In Home Care (IHC) services.

From 1 January 2026, all CCS gap fees must be paid directly by families to approved providers via electronic funds transfer (EFT), unless an exemption has been granted. Under this change, educators delivering FDC and IHC services will no longer be permitted to collect the gap fee on behalf of providers.

This measure is part of the Government’s broader efforts to strengthen transparency, reduce risk, and improve accountability within the child care subsidy system. The change aligns with long-standing requirements for centre-based services, ensuring consistency across service types.

The Department of Education has outlined that this shift aims to provide greater assurance that subsidy payments are used as intended and to support accurate reporting and compliance with the Family Assistance Law.

To support implementation, sector peak bodies have published guidance and resources tailored to service types:

• Visit Family Day Care Australia for Direct Gap Fee Collection Resources
• Visit NSW Family Day Care Association for In Home Care Direct Gap Fee Collection resources.

Services are encouraged to begin reviewing current payment and invoicing arrangements to ensure systems are in place for direct EFT payments ahead of the 1 January deadline.

Read the announcement here and for more information and to access resources visit: