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Permitted use of refundable deposits

People entering permanent residential care can choose to pay a lump sum for their accommodation.

As a provider, you can use these lump sums, known as refundable deposits, to generate income for your business.

You can only use refundable deposits for 'permitted uses' as specified by the Aged Care Act 1997 (Aged Care Act). They can't be used for:

  • day-to-day operating costs, such as staff wages or consumables
  • general repairs and maintenance
  • business activities other than residential aged care
  • personal gain or gratification.

What are the permitted uses?

For more information, download the Permitted uses of refundable accommodation deposits fact sheet (PDF, 481 KB).

For a summary of the permitted uses, see our permitted uses quick reference poster

Permitted uses are also discussed in the following video:

Transcript for 'Introduction to permitted use of refundable deposits'

Capital expenditure and related debt

Refundable deposits can be used to invest in new residential aged care infrastructure. This may include:

  • buying land with an existing aged care service
  • buying land for a new aged care service
  • buying, building or altering premises for aged care
  • buying or installing furniture, fittings or equipment for providing care (for premises that have been newly built or significantly altered)
  • covering costs that are directly related to any of the above
  • repaying debt directly related to any of the above.


You can invest refundable deposits in certain financial products to generate income. These products are specified in the Aged Care Act. You can use the income to improve your service however you choose.

To invest refundable deposits, you must:

  • start
  • implement, and
  • maintain an Investment Management Strategy.

To learn more:

Refunding refundable deposits

You can use refundable deposits to refund other refundable deposits. When refunding a refundable deposit, you must:

  • maintain sufficient liquidity
  • make refunds in line with the Aged Care Act.

To learn more, visit our Liquidity Standard page.


You can loan refundable deposit funds to other providers. These loans must:

  • not be made to an individual
  • be made on a commercial basis
  • have a written agreement in place
  • include a condition in the written agreement that the money loaned will only be used for:
    • capital expenditure
    • investing in financial products
    • refunding refundable deposits, or
    • repaying debt accrued for the purposes of capital expenditure or refunding refundable deposits
  • include in the written agreement any other conditions specified in the Fees and Payments Principles.

Repayment of debt accrued before 1 October 2011

You can use refundable deposits to repay debt accrued before 1 October 2011 as long as the debt relates to providing aged care.

Reasonable business losses

When you build a new aged care service or buy an existing one, your business may experience losses. You can use refundable deposits for the first 12 months of the service's operation to cover reasonable business losses.

You must always ensure you have enough liquidity to repay refundable deposits as they're due. To learn more, visit our Liquidity Standard page.

Other responsibilities

An effective governance system ensures you use refundable deposits appropriately. To learn more, visit our Governance Standard page.

You can learn about other provider obligations by watching the following video:

Transcript for 'Refundable deposits and provider obligations'

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