Means tested fee – The assessment of rental income from January 2016

(Please be aware that this has not been introduced into parliament at the time of writing, but is expected to be passed by both parties.)

A common strategy used in aged care is to rent the former home and ensure that some of the accommodation payment is paid as a daily accommodation payment (DAP).

The benefit of this strategy is an indefinite Centrelink/Veterans’ Affairs assessment as a homeowner and exemption for the home when determining pension eligibility. In addition, the rental income received is not assessable which reduces the means-tested fee and also helps to maximise pension entitlements.

It is proposed that the rental income exemption will not apply to residents who move into aged care from 1 January 2016. These residents will have the rental income included as assessable income when determining means-tested care fees, even if they are paying some DAP and the home will continue to have an asset value up to the capped amount.

Residents who move into residential care before 1 January 2016 will still qualify for the exemption on rental income (if a DAP is paid).

The income exemption will continue to apply for the Centrelink/Veterans’ Affairs income test for all residents.