Aged care: confirmation that loans to fund RAD’s do not reduce the RAD asset value 07 Dec 2016

Blog / Aged Care

It is not uncommon for family members to lend money to an aged care resident to fund the Refundable Accommodation Deposit (RAD) payable when entering an aged care facility.1


However, this strategy can result in an increase in the amount of means tested fees payable as the asset value of the RAD is included in the means tested amount assessment.


The Department of Social Services has previously advised that the assessable asset value of the RAD is not able to be reduced by the amount of any outstanding loan.


However an AAT case, Whitby and the Department Health Social Services in December 2015 found that the amount of the outstanding loan should be used to reduce the asset value of the RAD.


This decision led to optimism that the Department of Social Services might change its position, however it subsequently confirmed it would not be changing the assessment of RAD’s as a result of this case.


This position has been further clarified by the release of the Subsidy Amendment (Flexible Care Subsidy and Other Measures) Principles 2016, which state that an encumbrance does not reduce the assessable asset value of a RAD for means tested amount purposes.

1 Aged care residents with a means tested amount below the threshold at the date of entry may be liable to pay an accommodation contribution rather than an accommodation payment



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Disclaimer and Warning
The information above is of a general nature only.  It should not be used as a source to make financial decisions.  It's also important to note that the legislation and figures related to this topic tend to change regularly and therefore the information above may not reflect the current status.  We recommend that if you are looking for advice on this matter, you should contact


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