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Last amended: 1 August 2014
Assessment of vacated residence
If a person is absent from the principal home because they have entered a care situation, that former residence may continue to be regarded as their principal home for up to 2 years (hence disregarded in calculating the value of that person's assets). If the home is occupied by a partner, it will remain exempt from the assets test for as long as the partner is in that residence. When the partner vacates the home the two year exemption period will commence from the date of the partner's departure.
Assessment of vacated residence where pensioner lives overseas
If a person enters a care situation overseas, then their former residence becomes assessable from the day they entered care. This is because a person can only be considered to be an aged care resident if the care is being provided by an approved provider under the Aged Care Act 1997. This Act only applies to the states and territories of Australia.
Assessment of refunded entry contribution on leaving a retirement village
Where a person receives a refund of their entry contribution amount on leaving a retirement village to enter aged care, the amount becomes an assessable asset as it no longer represents a principal home interest, i.e. an amount paid for the right to live in the retirement village.
However, entry contribution refunds may be delayed when a person leaves a retirement village. This may typically occur until the vacated unit is sold or for the time period specified in the Residential Agreement (commonly twelve months), whichever is the shorter period.
Where the refund of the person's entry contribution is delayed, and is not received for a period of time following their departure from the retirement village to enter aged care, the entry contribution amount continues to be exempt until such time as it is received. Subject to the normal 2 year exemption limit, while the entry contribution amount remains with the retirement village owner it continues to represent the person's right to live in the retirement village, and retains the status of a right or interest in a principal home providing reasonable security of tenure.
For the extended exemption of the entry contribution amount to apply in these circumstances, it is necessary that the amount was a disregarded asset during the person's residency in the retirement village i.e. the amount exceeded the Extra Allowable Amount resulting in homeowner status.
Note: For means-testing relating to residential aged care fees and charges, policy advice from the Department of Social Services is that a refundable amount is assessable regardless of delays, or the likelihood of repayment. Please refer to the Procedural Library for details.
Additional benefit for persons renting out their former home
A person's former residence may also be taken to be their principal home during any period where the person entered care before 1 January 2017 and is paying (or there is a liability to pay):
- a Daily Accommodation Payment (DAP) or a Daily Accommodation Contribution (DAC), an Accommodation Charge or all or part of an accommodation bond by periodic payments
- and rents out the former home.
Any rent received is exempt from the income test for the period that the principal home is exempt. There is no requirement to establish whether the rent from the former home is used to pay the accommodation costs.
This additional exemption from assessment does not apply when the person is living in residential aged care overseas, as the relevant accommodation costs attracting the exemption are those specified in the Aged Care legislation.
Note: The requirement for a person to be receiving rent from the property is intended to provide a concession when the pensioner is actually using the property to provide them with income while they are in aged care. The rent received must be in respect of the occupancy of the former principal home, though the occupancy does not need to be for a specific period of time. For example, an aged care resident receiving rent from a bed and breakfast arrangement or similar temporary rental arrangement can be accepted as meeting the meaning of rent for this purpose. However, where a family member pays rent to use a garage for storage purposes, but does not actually live at the property, the meaning of rent is not satisfied and the assets test exemption period and rental income exemption no longer applies.
The exemption for the former home may continue to apply through periods of vacancy and that the pensioner may not be receiving income from the property, provided there remains an intention to rent out the former home property. Where it is decided that the property is not to be re-let, the exemption for the home would cease to apply as the person would not be regarded as earning, deriving or receiving rent from the property. Where income has not been received from a property for a reasonable period, it may be necessary to check that the property is actually being offered for rent.
Multi Purpose Service (MPS)
Multi-Purpose Services (MPS) are designed specifically for rural and regional areas, to bring together a range of health and aged care services under one management structure, where traditional styles of services may not usually be viable. However, unlike residential aged care facilities, care recipients are not required to be ACAT assessed and MPS facilities do not receive Australian Government funding for individual residents. Therefore recipients residing in MPS facilities may be eligible to receive rent assistance on the amount of rent they pay to their MPS service provider.
A payment for accommodation costs worked out by converting the refundable accommodation deposit (RAD) to a daily amount, which is payable as a periodic amount by aged care residents.
A payment for accommodation that accrues daily and is payable as a periodic amount by aged care residents for whom the Government is also making a contribution.
An accommodation charge is an additional daily fee, which is paid by person's residing in ACAT approved permanent High Level Care.
It is paid in addition to the standard resident daily care fee and any additional income tested fee, which may apply.
Accommodation charges are payable for as long as a resident remains in care. For those residents who entered care prior to 1 July 2004 the accommodation charge is limited to a maximum five years.
http://clik.dva.gov.au/glossary/acat - defintion of ACAT
http://clik.dva.gov.au/glossary/high-level-care - definition of 'High Level Care'
An accommodation charge only applies to those persons entering an aged care facility prior to 1 July 2014.
An accommodation bond is an amount of money paid by Low Level Care and Extra Service Care residents in an aged care facility. An accommodation bond may be paid as a lump sum, or by periodic payments, or a combination of both lump sum and periodic payments.
The provider can deduct a monthly retention amount, for a maximum of 5 years, from the accommodation bond. The monthly retention amount is a fixed amount specified in the accommodation agreement and cannot exceed the capped maximum amount applicable at the time of entry to the facility. The provider also retains any interest derived from the bond.
The balance of the lump sum accommodation bond is refundable to the resident or their estate on departure. The refunded accommodation bond balance is an assessable asset.
If there is a liability under the accommodation bond agreement for the bond to be paid wholly, or partly by periodic payments and the former principal home is rented out, then both the former home and the rental income are exempt from the income and assets tests.