Refunding lump sums in residential aged care

You must refund a resident’s accommodation lump sum balance when they permanently leave your care. You will have to pay interest until you pay the refund.

Refundable payments

Accommodation lump sum balances you need to refund include:

Refund period

You must refund a resident’s lump sum balance to them within the legislated refund period. 

If the resident permanently moves to another service, you must refund their lump sum balance:

  • on the day they leave – if they give more than 14 days’ notice
  • within 14 days after them giving notice – if they give up to 14 days’ notice
  • within 14 days after them leaving – if they don’t give notice.

You must also refund a lump sum balance within 14 days after:

  • a resident permanently leaves residential care
  • sighting probate or letters of administration after a resident dies
  • your services ceases to be certified.

Refund periods are defined in:

Interest rates and timeframes

Until you refund the lump sum balance, you must pay interest at the:

  • base interest rate (BIR) – from the day after the resident’s permanent departure or the day after the resident died, until the end of the legislated refund period
  • maximum permissible interest rate (MPIR) – from the day after the end of the relevant refund period until the refund is paid.

For interest calculations see Section 69 of the Fees and Payments Principles 2014 (No. 2).

Check the current and previous BIR and MPIR interest rates.

Which rate of BIR and MPIR to use

The BIR and the MPIR are updated quarterly.

For the BIR, use the rate current on the first day of the refund period:

  • if the resident died – the day after sighting a copy of probate or letter of administration
  • if the resident moves to another service and
    • gives up to 14 days’ notice – the day after the resident gives notice
    • gives no notice of departure – the day after the resident leaves
  • in any other case – the day after the resident leaves.

For the MPIR, use the rate current on the day after the end of the refund period.

The BIR does not apply if the resident moves to another service and gives more than 14 days’ notice of departure. In this case the refund is due on the day of departure and the MPIR applies from the day after departure until you complete the refund.

Refund interest calculation example

Your resident paid a refundable deposit of $400,000 for accommodation. The resident died on 14 September 2023 and you were presented with probate on 6 February 2024. 

After the resident’s agreed deductions from the refundable deposit, there is a remaining balance of $380,000 to be refunded, plus interest. 

If you refund the refundable deposit balance on 10 February 2024, this is how you calculate your interest payable:  

Refund period = 14 days after you sight probate (7 February to 20 February 2024)

BIR = base interest rate in effect on the first day of the refund period (2.25% on 7 February 2024)

RDB = refundable deposit balance after deductions ($380,000)

ND = number of days from the day after the resident dies (15 September 2023) to the day in the refund period when the refund is paid (10 February 2024) (149 days)

Interest payable
= BIR × RDB × ND / 365
= 2.25% × $380,000 × 149 days / 365
= $3,490.27

Interest is not payable at the MPIR since the refund was paid within the legislated refund period.  

Refunds while a resident is in care

You can refund accommodation lump sum amounts if requested by a resident who is still accessing care in your service. This is not a legal requirement. It is a business decision you can make on a case-by-case basis.

You and the resident must mutually agree to any changes to accommodation payment arrangements. You must record changes in the accommodation agreement or resident agreement.

Full requirements

For full details, see Division 52P of the Aged Care Act 1997.

Also see the Fees and Payment Principles 2014 (No. 2):

  • rules for refunding accommodation deposit balances and accommodation bond balances – see Part 7
  • how to calculate the BIR – see Section 4
  • how to calculate the MPIR – see Section 6.


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