Schedule 1, Part 1

How functional capacity is now measured

From 27 August 2026 an assessment of what a person can do must strip out the effect of their surroundings and their personal circumstances, and count only the help that is commonly used and would ordinarily be used.

What does the provision require?

The Act inserts a definition of functional capacity into the National Disability Insurance Scheme Act 2013. Functional capacity for an activity means how well the person can carry that activity out, whether alone or with help from assistive technology or modifications of a kind that are common and that the person would normally rely on. For a child, appropriate help from other people also counts. The assessment must put the person in a setting that removes, so far as possible, the effect of their surroundings and personal circumstances.

The rules may prescribe how this is worked out: methods, criteria, classifications and thresholds, what may or must not be weighed, circumstances taken to exist or not exist, and which assistive technology counts as commonly used. The Act gives glasses and walking sticks as examples of ordinary assistive technology. The disability requirements and the early intervention requirements are both read through the new definition, and an assessment must consider each listed activity as a whole.

Why does it matter to an insurer or a provider?

Every severity judgement in an NDIS file now rests on a defined measure. For an insurer the practical effect is on quantum: a report that describes what a person cannot do while sitting in an unsuitable home, or while caring for a child without support, overstates the impairment once the environmental overlay is removed. Claims and underwriting teams that rely on an older functional assessment should expect the Agency to reach a lower level of need on the same facts, and should ask whether the file contains an assessment built on the new test.

What did the amendment change?

Before this Part there was no statutory definition of functional capacity. The assessment language sat in policy and in the rules. The Act puts the concept in the primary legislation, ties it to a context that excludes environmental and personal circumstances, and makes the rules the place where thresholds and methods are set.

Suggested evidence

These are the publisher's control suggestions, not statutory requirements. The provision's own requirement is above; an auditor or regulator decides what is sufficient.

The assessment report relied on, with its date and the tool or method used
The assessor's statement of the assistance counted and the assistance excluded
Any functional capacity assessment obtained after 27 August 2026 for the same person, and the reason for a second assessment
The plan or decision that applied the definition, with the activity by activity reasoning
The file note recording the environmental and personal circumstances that were set aside

What should be done before the date?

Ask whether any assessment in the file predates 27 August 2026 and whether it applied a context that is now excluded
Require a new assessment where the severity finding drives the reserve or the indemnity
Record the version of the definition used in every reserve note

What the text does not say

The text does not set the thresholds, the assessment tool or the classification. Those are left to the National Disability Insurance Scheme rules, which are not part of this Act. The Act does not say what happens to an assessment made before 27 August 2026 that is later relied on in a decision made after that date.

Where this sits

section 9B, inserted by item 4 in Schedule 1, Part 1, Defining functional capacity (items 1 to 11). Read the official text at https://www.legislation.gov.au/C2026A00066/latest/text. The record was read on 21 October 2026.

Not legal advice; does not certify. This page is a reading of the provision in our own words, not a reproduction of it, and not advice on your own facts.