Providers must take all reasonable steps to collect gap fees from families electronically. This is a requirement under Family Assistance Law. This page provides guidance to help providers comply with this obligation.
On this page:
About this obligation
Families who get Child Care Subsidy (CCS) must make a co-contribution to their early childhood education and care fees by paying the gap fee. Families must pay the gap fee using electronic funds transfer, or EFT.
You must take all reasonable steps to collect gap fees from families electronically. This is a requirement under Family Assistance Law.
The requirement to collect the gap fee electronically only applies to families who get CCS.
We regularly conduct audits to ensure you are complying with this obligation.
By checking that you are collecting gap fees electronically, we:
- protect CCS against mistakes, non-compliance and fraud
- ensure you receive a key part of your income.
Facts from Family Assistance Law
This obligation comes from section 201B of A New Tax System (Family Assistance) (Administration) Act 1999.
The legislation uses the phrase ‘take all reasonable steps’.
The term ‘reasonable’ is defined as ‘based on or using sound judgement and therefore fair and sensible.’
In the context of this obligation, the department considers that providers must take “a diligent and intelligent interest in the information either available to them or which they might appropriately demand from the executives or other employees and agents of the company”.
Taking all reasonable steps to collect gap fees
All providers should have policies and procedures that set out how you will responsibly administer CCS and comply with Family Assistance Law. These are known as your governance arrangements.
The following guidance illustrates the type of governance arrangements that would demonstrate you are taking all reasonable steps to collect gap fees electronically.
- is general guidance only
- is intended to help you develop your own policies and procedures
- is not a definitive list of your obligations under Family Assistance Law.
Provide clear advice and support to families
You should provide clear advice about gap fees to families who attend, or are considering attending, your service.
You should provide regular, clear and timely advice to families about:
- fee amounts
- EFT payment options
- payment/billing cycles
- the status of a family’s gap fees, including amounts due, paid and owing.
Some families may need help paying the gap fee or using EFT. We encourage you to talk to families who need help about financial support options.
Offer a range of EFT payment options
We encourage you to offer a range of options to provide flexibility to families.
There are many EFT payment options available, including some that operate similarly to cash.
Business.gov.au has guidance on EFT payment methods. You may also wish to talk to your third-party software provider about EFT payment options.
Update your policies
You should incorporate information about EFT payment options as part of your policies, such as fee policies or enrolment forms.
You must monitor gap fees due, paid and owing. So this is done accurately, you should:
- use good systems, processes and technology
- ensure your staff are trained and skilled.
You must also reduce the risk of error or fraud. This could include:
- doing spot checks
- running independent audits
- providing clear governance and oversight.
You should send families regular and timely advice about fees that are due, paid and owing.
Consider other safeguards
You may consider other safeguards to encourage the timely payment of gap fees, like:
- requiring families to pay bonds
- imposing late payment or direct debit default fees.
Have a plan to manage debts
Despite your best efforts, you may encounter a family who does not pay their gap fees. You must still take all reasonable steps to collect the gap fee when a family accrues a debt.
You should have policies and procedures that guide how you will manage debts. This could include:
- following up debts with families in a timely manner
- providing families with advice in writing about amounts overdue and consequences of non-payment
- implementing payment plans to help families manage a debt over time
For circumstances where families continue to not pay, you may consider including in your policies:
- debt collection options
- options to pause care arrangements.
You may consider writing off a debt if it becomes too costly to pursue. You should only do this in exceptional circumstances where it is clear you’ve taken all reasonable steps to collect the outstanding fees. You must keep records of your efforts, including:
- correspondence with families
- referrals for debt collection.
When a family does not want to use EFT
Where a family won’t pay the gap fee using EFT, you can:
- apply for an EFT exception
- charge full fees, or
- refuse to provide care.
EFT exceptions are only available in limited circumstances. Read about EFT exceptions on our electronic payment of gap fees page.
When an educator collects fees on your behalf
It is considered best practice for a provider to collect all gap fees. This is because:
- it reduces the risk of non-compliant or fraudulent claims for CCS
- it is the provider that experiences the consequences of any non-compliance.
New Family Day Care and In Home Care providers must collect gap fees into a bank account that the provider owns. While educators may collect the gap fee on behalf of these providers, the payment must go to a bank account controlled by the provider. Read more about governance arrangements for new providers on our get ready to apply page.
For existing providers, where an educator collects the gap fee on your behalf, it is still your responsibility to ensure:
- the gap fee is collected
- that an EFT system is used.
If the educator does not comply with the law, it’s the provider that experiences the consequences. This can include:
- cancellation of your approval
- an infringement
- criminal proceedings.
Having an educator collect gap fees can also place a greater administrative burden on you.
Educators who collect gap fees should be able to show they have taken all reasonable steps to collect gap fees.
You must maintain oversight of gap fee collection and ensure compliance. In practice, this could include:
- collecting copies of educator bank statements
- conducting regular audits or spot checks
- requiring educators to provide regular reports about the status of individual family accounts, including where gap fees have not been paid and steps taken to pursue debts.
You should also be aware of the EFT payment options an educator provides. If you are not satisfied that an educator can collect the gap fee using EFT, you must collect the gap fee.
You must have appropriate record keeping and storage requirements to ensure records are available to inform audits, even after an educator leaves your service.
When an EFT exception applies
Exceptions are available for individuals and services in limited circumstances. Read about EFT exceptions on our electronic payment of gap fees page.
An EFT exception does not exempt you from the requirement to collect the gap fee.
Where an exception applies to an individual or a service, you must take all reasonable steps to collect the gap fee in cash. If you are audited, you’ll need to show evidence that you collected the gap fee in cash.
You should have policies and procedures in place that address arrangements where an EFT exception applies.