Early Childhood Education and Care (Three Day Guarantee) Act 2025

Subsidised hours is the new central concept, replacing the old activity test result. It is defined in new subclause 11(1) as a number worked out for an individual in relation to a child for a CCS fortnight. The calculation proceeds in two stages: first, take the highest of the 3 day guarantee (72) or any result listed in the table in subclause (1B); second, if the individual is a member of a couple, take the lower of that result and the result worked out for the partner. The result is expressed as a number of hours per CCS fortnight. It feeds into the method statement for calculating the amount of child care subsidy (CCS) and additional child care subsidy (ACCS). The 3 day guarantee is set at 72 hours per two-week period. It is a default floor: an individual who does no paid work, study, or any other recognised participation type still receives 72 subsidised hours per fortnight. The guarantee applies to any child (subclause (1A): “in relation to any child”). It is not means tested or subject to any activity condition. The increased hours result of 100 applies to an individual who engages in more than 48 hours of a “recognised participation type” in the CCS fortnight (new subclause 12(1A)). This is a threshold: less than 48 hours yields no increased result, meaning the individual falls back to the 3 day guarantee (or another result from the table). Recognised participation type replaces the old term “recognised activity” and includes paid work, self‑employment, unpaid work in a family business, and other types prescribed by minister’s rules (subclause 12(2)). It also includes associated participation types and breaks prescribed by rules (subclause 12(3)). The couple cap is a critical modifier: where an individual has a partner on the first day of the CCS fortnight, the subsidised hours for the individual is the lower of his or her own result and the partner’s result (subclause 11(1)(b)). This means that if one partner works 50 hours per fortnight (result 100) and the other works 10 hours (result 72 from the guarantee), both are limited to 72 per child. The couple cap thus operates as a per‑family limit for each parent’s claim. Basic subsidy amount is the renamed “activity‑tested amount” , the component of the subsidy calculation that does not include adjustments for income or hours caps. Deemed subsidised hours (clause 16) replaces the old deemed activity test result, relevant for certain administrative presumptions about future eligibility.

The Act affects all families who use approved child care and claim the Child Care Subsidy or Additional Child Care Subsidy. Parents who do not engage in paid work, study, or volunteering are the primary beneficiaries of the 3 day guarantee. Under the old activity test, such parents often received zero subsidised hours (or a low income result of 72 if they met a low income threshold). Now they receive 72 hours per fortnight regardless of income or activity, subject to the couple cap. Parents who work more than 48 hours per fortnight (roughly 24 hours per week) gain access to the increased hours result of 100, but only if they are not capped by their partner’s result. Members of couples face the most significant structural change. The couple cap merges the individual results, so that even a high‑earning working parent is pulled down to the lower of the two results. This disadvantages families where one parent works heavily and the other works little or not at all. For example, a single‑earner family where the working parent works 60 hours per fortnight and the non‑working parent stays home: both parents get 72 hours per child per fortnight, not 100. Parents of Aboriginal or Torres Strait Islander children see an increase from 36 to 100 per fortnight under subclause 15A (item 50). Providers of approved child care will need to adjust their billing and reporting systems to accommodate the new hourly caps and to verify that families are not claiming more subsidised hours than the Act allows. The Act also affects Services Australia, which must update its administrative systems to calculate subsidised hours on the new basis, manage couple‑capped entitlements, and process the new results table (including child wellbeing results and exceptional circumstances results). The repeal of definitions such as “low income result” means that families previously entitled to an extra 72 hours solely due to low income no longer have that discrete category; instead, they receive the 3 day guarantee plus any additional result available. The Minister gains rule‑making power to prescribe additional participation types and associated breaks, and to set results under clause 14. Self‑employed individuals and those in unpaid family work are included in the definition of recognised participation type (subclause 12(2)(a)-(c)), which may expand eligibility compared to the old “recognised activity” definition, though the exact scope depends on ministerial rules. Transitional rules under item 3 of Schedule 2 can affect families and service providers during the changeover period, but cannot impose taxes, create offences, or amend primary legislation.

Individuals seeking to claim the increased hours result of 100 have a duty to demonstrate that they engage in more than 48 hours of a recognised participation type in the CCS fortnight. This requires accurate reporting of hours spent in paid work, self‑employment, unpaid family work, or other prescribed participation types. The Secretary may determine the number of hours to be counted under subclause 12(5), and ministerial rules under subclause 12(4) may specify how hours of a particular participation type are counted. The individual does not have a right to the increased hours result automatically; it depends on meeting the threshold and on the application of rules and determinations. For couples, each individual has a duty to provide information about their partner’s participation type hours, because the couple cap uses the lower result. An individual cannot circumvent the couple cap by claiming as a single parent; the relevant date for determining couple status is the first day of the CCS fortnight (subclause 11(1)(b)). An individual who qualifies for both CCS and ACCS in the same fortnight must have their subsidised hours determined under the note to subclause 11(1B), which cross‑references subclause (5). The note does not specify the method, but subclause (5) (as amended by item 34) refers to subsidised hours for such individuals. The right to the 3 day guarantee is unconditional: it applies “for an individual for a CCS fortnight, in relation to any child” (subclause (1A)). There is no activity or income test attached to the 72 hours. However, the right is not absolute in the sense that the couple cap may reduce it for a member of a couple if the partner’s result is lower. For example, a non‑working partner would have a result of 72, but if the working partner also has a result of 72 (because of the cap), then both get 72. If the working partner engages in more than 48 hours of participation type, the working partner’s individual result would be 100, but the non‑working partner’s result is only 72, so the working partner’s subsidised hours become 72 (the lower of 100 and 72). The working partner thus does not have a right to 100 hours if the partner’s result is lower. The Minister has a duty to make transitional rules that cannot create offences or impose taxes. The Secretary has power to make determinations about hours counting and deemed subsidised hours. Providers have a duty to accept the subsidy and to not charge families more than the gap fee, though this Act does not directly amend those provisions.

The Act does not create any new offences or civil penalties. Item 3(2) of Schedule 2 expressly prohibits transitional rules from “creat[ing] an offence or civil penalty”. Enforcement therefore relies on existing provisions in the A New Tax System (Family Assistance) (Administration) Act 1999 (Administration Act). That Act already contains offences for obtaining child care subsidy by giving false or misleading information, failure to notify changes of circumstances, and overpayments. Under section 67CE of the Administration Act, the Secretary may issue a notice requiring information about an individual’s activity test result; the amendment at item 54 substitutes “subsidised hours” for “activity test result”, so the same information‑gathering powers apply to the new hours framework. Individuals who overstate their participation type hours to qualify for the increased hours result of 100 may be liable for administrative penalties under the Administration Act, including debt recovery and loss of CCS. Similarly, failure to provide accurate partner information that affects the couple cap could result in overpayment. The Administration Act also provides for review of decisions and internal reconsideration. The transitional rules (item 3) allow the Minister to make provisions of a transitional nature, but they cannot circumvent the prohibition on creating new penalties. The existing compliance framework for child care subsidy , including compliance checks, automated data matching, and random audits , will apply to the new subsidised hours framework. The removal of the activity test for the base 72 hours reduces the incentive to misreport low activity, but the increased hours threshold of 48 hours creates a new potential compliance risk: individuals may exaggerate hours worked or claimed participation types to cross the 48‑hour line. The enforcement burden falls on Services Australia to verify participation hours, especially for self‑employed individuals and unpaid family workers, where objective time records are less common. The couple cap also creates a new enforcement node: the Secretary will need to identify all members of a couple and compare their results. This could lead to compliance action if one parent fails to disclose a partner or the partner’s true participation hours.

The Act directly amends the A New Tax System (Family Assistance) Act 1999 and the A New Tax System (Family Assistance) (Administration) Act 1999. It does not amend the A New Tax System (Family Assistance) (Cessation of Adoption) Act 1999 or any other Acts. The interaction with the family assistance law is comprehensive: the definitions, method statements, and hour calculation rules are all rewritten. The Act also interacts with the A New Tax System (Family Assistance) (Rules) Instrument 2020 and any other legislative instruments made under the Family Assistance Act. Item 2 of Schedule 2 provides that pre‑commencement rules made under clause 12(2)(d), 12(3)(a) or (b), or 12(4)(a) or (b) continue in force as if made under the amended provisions. This means the body of ministerial rules that define recognised activities and associated breaks remains in force, though the terminology changes from “activity” to “participation type”. The interaction with the Social Security Act 1991 is indirect: child care subsidy eligibility does not affect social security payments directly, but changes in hours of care can affect parents’ capacity to work and their social security obligations. The Act does not amend the social security law. The interaction with the Family Law Act 1975 is minimal; child care subsidy is not a matter under that Act. The Act interacts with state and territory child care regulations only to the extent that the Commonwealth definition of subsidised hours may affect what is reported as a gap fee or CCS entitlement. State regulation of provider licensing remains unaffected. The transitional rules under item 3 allow the Minister to make further provisions of a transitional nature, but cannot override other Acts or impose taxes. This arguably preserves the interaction with the Legislation Act 2003 (registration, tabling, disallowance) for those rules. The Act does not interact with the Competition and Consumer Act 2010; it does not alter provider pricing or contractual arrangements beyond the subsidy side. The interaction with the A New Tax System (Family Assistance) (Overseas Portability) Determination is not directly addressed, but the amendments may affect how hours are portable.

This Act is itself an amendment Act; it does not amend any existing Act by its own historical amendments. The amendment history of the underlying Family Assistance Act and Administration Act is extensive. This Act inserts new definitions and replaces the entire activity test framework. Key amendments include the repeal of the definition of “activity test result” (item 2) and “low income result” (item 6) , both of which were inserted by earlier Acts. The concept of “recognised activity” was originally introduced by the Family Assistance Legislation Amendment (Child Care) Act 2010 and amended several times. This Act replaces it with “recognised participation type”. The “3 day guarantee” is a new concept, not previously found in the family assistance law. The amendment history of clause 15A (Aboriginal or Torres Strait Islander child result) shows the figure was previously 36; this Act raises it to 100 (item 50). The structure of Part 5 of Schedule 2 has been overhauled: the old Part 5 was titled “Activity test results”, now renamed “Subsidised hours”; the old Division 1 was titled “Activity test result”, now “Individual’s subsidised hours”; Division 2 was “Activity test result - further provisions”, now “Subsidised hours - further provisions” (items 30, 31, 51). The amendment history of the Administration Act shows changes to references in sections 67CE, 105D, 105E, 108, 111, and 157 (items 54-57). These are purely mechanical substitutions. The Act itself has no amendment history , it was assented to on 20 February 2025 and commences on the later of 1 January 2026 or the day after royal assent (section 2). The second reading speeches were made in the House of Representatives on 5 February 2025 and the Senate on 13 February 2025. The Act is short: three sections and two schedules. The transitional provisions (Schedule 2) allow the Minister to amend the transitional rules by legislative instrument, but not to amend the text of an Act (item 3(2)(e)). This is a standard limitation that prevents ministerial rules from overriding the Act itself.

As at the date of writing, no litigation has arisen from this Act because it has not yet commenced (1 January 2026). The Act’s provisions are not yet in force and cannot be judicially reviewed. However, several areas are likely to generate disputes. The couple cap in subclause 11(1)(b) is the most litigable provision. Questions may arise about what constitutes a “member of a couple” on the first day of the CCS fortnight. The family assistance law has its own definition in section 3 of the Administration Act, which incorporates factors such as living arrangements, financial interdependence, and relationship status. Disputes may arise about whether a separated parent under one roof is still a member of a couple, or whether a de facto relationship of short duration qualifies. The phrase “the lower of” is unambiguous, but the application across multiple children and multiple CCS fortnights could generate interpretive issues. The interpretation of “engages in more than 48 hours of a recognised participation type” (subclause 12(1A)) may be contested: what counts as engaging? Does it include time spent commuting, training, or receiving pay for leave? Subclause 12(3) provides some relief for associated participation types and breaks, but the scope of those will depend on ministerial rules. Litigation may arise if ministerial rules prescribe participation types that are alleged to go beyond the scope of the Act. The transitional provisions may also be challenged if they are seen as unreasonable or beyond the Minister’s power. The limitation in item 3(2) , that transitional rules cannot create offences, impose taxes, or amend an Act , could be the subject of a legal challenge if a rule is alleged to exceed these boundaries. The repeal of the “low income result” may have retrospective effect? No, item 1 of Schedule 2 says the amendments apply only to sessions of care in CCS fortnights starting on or after commencement. Past fortnights are governed by the old law, so no retroactivity issue arises. However, if a family had a historic entitlement under the low income result that they expected to continue, the removal of that category is prospective only. No case law yet exists on the “3 day guarantee” concept.

The couple cap is the most likely source of unexpected reduction in subsidy. A family with one high‑earning parent and one low‑earning parent will be capped at the lower of the two results. If the low‑earning parent works only 10 hours per fortnight, that parent’s individual result is 72 (the 3 day guarantee). The high‑earning parent’s individual result may be 100 (if working more than 48 hours), but because the couple cap takes the lower of 100 and 72, the high‑earning parent’s subsidised hours become 72 per child. The family cannot claim 100 hours for the high‑earning parent. Two parents who both work 25 hours per week (50 hours per fortnight) each get 100, and the couple cap takes the lower of 100 and 100, so both stay at 100. But if one parent works 25 hours and the other works 20 hours per week (40 hours per fortnight), the second parent does not reach the 48‑hour threshold and thus has a result of 72. The first parent then is capped at 72. This creates a strong incentive for the lower‑earning parent to push over 48 hours if the family wants the increased result. The 3 day guarantee of 72 is not an absolute guarantee for each parent in a couple , it is the floor for each individual’s own result, but the couple cap may reduce the other parent to a lower number. Another gotcha: the couple cap applies per child, so if the family has three children, the cap applies to each child claim separately. The total subsidy may still be capped by the overall limit of 100 hours per child per fortnight, but that is not changed. The increased hours result of 100 is only available if the individual engages in “more than 48 hours” , not “at least 48 hours”. An individual with exactly 48 hours of participation in the fortnight does not qualify and receives only 72. This threshold is a cliff: one hour of missing data could cost the family 28 hours of subsidised care per fortnight. The 48‑hour count includes time spent in recognised participation types as defined by subclause 12(2) and associated types under subclause (3). But the Secretary may determine the number of hours to be counted (subclause 12(5)). This introduces administrative discretion that could reduce the count if the Secretary is not satisfied with the evidence. The renaming of “activity” to “participation type” in the Administration Act (item 57) expands the scope of information‑gathering powers in section 157(2)(k) to cover any participation type, not just “activity”. This potentially broadens the class of records the Secretary can require a provider to produce. The repeal of the low income result (item 6) means that low‑income families who previously received 72 hours under that result now receive the same 72 hours under the 3 day guarantee, but there is no separate low‑income category to claim. If a family’s income rises, it does not lose the 72 hours, because the 3 day guarantee is not income‑tested. However, the subsidy rate (dollar amount per hour) remains income‑tested; this Act does not alter the income test in Division 2. So a high‑income family still gets the 72‑hour floor but at a lower subsidy percentage. The transition: existing rules and determinations continue as if made under the amended provisions (item 2 of Schedule 2). But the old rules refer to “recognised activity”. A rule that prescribes a training course as a recognised activity now deems it a recognised participation type. This might inadvertently expand or contract categories depending on the language used. Families should check that their participation type remains recognised. The Minister’s power to make transitional rules (item 3) allows changes without parliamentary amendment, which could introduce unexpected modifications at the last minute.

For an individual or family, the first step is to determine whether you are a member of a couple on the first day of each CCS fortnight. If not a couple, your subsidised hours are simply the highest result from the table in subclause 11(1B) , likely 72 (the 3 day guarantee) or 100 if you work more than 48 hours per fortnight in a recognised participation type. If you are a member of a couple, compute your own result and your partner’s result independently, then take the lower for each of you per child. This requires both parents to disclose and verify their participation hours. To qualify for the increased hours result of 100, you must engage in more than 48 hours of a recognised participation type in the CCS fortnight. Keep detailed time records: payslips, timesheets, business records, or receipts for unpaid work in a family business. For self‑employment, maintain contemporaneous diaries or hours logs. For unpaid family work, ensure you can demonstrate the business operates and that your contribution is genuine. Ministerial rules may prescribe additional participation types , check the Family Assistance (Child Care Subsidy) Rules for updates after 1 January 2026. If you are a parent with a partner, coordinate with your partner to understand their participation hours. If both parents want the 100‑hour result, each must exceed 48 hours per fortnight. If one parent is below 48 hours, the other is capped at 72. Consider adjusting work schedules or study loads to push both partners over the 48‑hour line if 100 hours per fortnight is needed. If that is not possible, plan care usage around the 72‑hour cap. The 3 day guarantee gives 72 hours per child per fortnight , roughly three 12‑hour days per week. Families needing more than that per child should maximise the parent who can get the increased hours result. Remember that the couple cap applies per child per individual, so each parent’s claim for each child is capped. If using different child care providers, the cap still applies. Report hours accurately to Services Australia through your family assistance online account each fortnight, or as otherwise required. Overreporting to cross the 48‑hour threshold could result in overpayment debts. Review if you qualify for other results in the table: child wellbeing result (clause 15), exceptional circumstances result (clause 15B), Aboriginal or Torres Strait Islander child result (clause 15A). The Aboriginal or Torres Strait Islander child result gives 100 per fortnight (item 50) without needing the 48‑hour threshold. If a child is identified as Indigenous, ensure that status is recorded. For providers, update your billing systems to accept the new subsidised hour limits. The system calculates the subsidy amount based on the hours the individual is entitled to, not the hours the child attends. Providers must not charge more than the gap fee based on the subsidised hours entitlement. The transitional provisions (item 2) mean existing rules about attendance reporting and session definitions continue. Providers should continue to report session details to Services Australia as before. Finally, stay alert to ministerial transitional rules that may alter the counting of hours or introduce temporary provisions. These rules can be made without amending the Act and could affect early months of operation.