Residential Care Means Testing

Income and assets determine what must be paid towards their accommodation and care

Residential Care Means Testing

Income and assets determine what must be paid towards their accommodation and care

Income and Asset Testing for Commonwealth-Regulated Residential Aged Care in Australia

For many older Australians and their families, the process of moving into residential aged care brings up many questions — and few are bigger than how much it will cost. The Australian Government heavily subsidises aged care, but it also expects people to contribute where they can afford to do so. This balance is managed through what’s known as an income and asset assessment.

In Australia, the means-testing process for residential care uses a person’s income and assets to determine what they must pay towards their accommodation and care. This helps ensure that funding is fair, targeted to those who need it most, and transparent for families planning their future.

In this guide, you’ll learn:

  • What income and asset testing is, and why it’s needed.
  • What’s counted as income or assets (and what’s exempt).
  • How testing affects your fees and charges.
  • How to apply — including how to fill out the key forms: SA485 and SA457.
  • Practical tips for getting the best outcomes for you and your family.

Why Does Means Testing Exist?

The Australian Government subsidises residential aged care to ensure it remains accessible to people who genuinely need it. However, it also wants to ensure people who can afford to contribute do so, while protecting the financial wellbeing of those with limited means.

The means test looks at your financial situation to decide:

  • Whether you need to pay a Means-Tested Care Fee (an additional contribution towards your daily care costs).
  • Whether you need to pay an Accommodation Payment (all, some, or none).

This assessment is separate from your pension eligibility. Even if you receive the full Age Pension, you may still have to pay some fees depending on other assets you own.

Who Carries Out the Assessment?

The means test is administered by Services Australia (Centrelink) or the Department of Veterans’ Affairs (DVA) if you’re a veteran. The outcome is then sent to your chosen aged care provider so they know how much to charge you and how much they’ll get in government subsidies on your behalf.

This means your care provider will ask you to complete an income and assets assessment before you move in.

What Counts as Income and Assets?

Income includes:

  • Centrelink or DVA pensions or benefits.
  • Private pensions (e.g., from superannuation or overseas).
  • Rental income from investment properties.
  • Deemed income from financial investments (this uses deeming rules to estimate likely returns — see our separate guide on deeming).

Assets include:

  • Bank account balances.
  • Shares, managed funds, or other investments.
  • Superannuation (if you’re over Age Pension age).
  • Real estate, including your family home (with exemptions).
  • Cars, boats, caravans, and other valuable possessions.

Important: Your family home is exempt from the assets test if your spouse (or a protected person like a dependent child or carer) continues to live there. Otherwise, the value of the home is counted up to a capped value ($201,231.20 for 2025–26, indexed).

Tip: Different rules may apply if you own your home with other family members or have a granny flat interest — get advice if your situation is complex.

How the Means Test Affects Your Fees

The income and asset assessment influences:

  • Whether you pay the Basic Daily Fee: Everyone pays this. It is not means tested.
  • Whether you pay a Means-Tested Care Fee: This is an additional daily fee that you may pay if your income or assets are above certain thresholds. It is capped both annually and over your lifetime.
  • Whether you pay an Accommodation Payment: If your income and assets are below the threshold, the government pays the full cost. If they are above the threshold, you may need to pay some or all of your accommodation cost.

Annual and Lifetime Caps

The Means-Tested Care Fee is subject to:

  • Annual Cap: $33,309.29 for 2025–26 (indexed).
  • Lifetime Cap: $79,942.44 for 2025–26 (indexed).

Once you reach these caps, you no longer pay the Means-Tested Care Fee.

How to Complete an Income and Assets Assessment

Before you move into residential aged care, you’ll need to submit the correct forms to Services Australia (Centrelink) or the DVA. There are two key forms:

Form SA485: Permanent Residential Aged Care Request for a Combined Assets and Income Assessment

The SA485 is the main form for new residents entering permanent residential care. It asks for detailed information about:

  • Your current income (pensions, annuities, rental income, overseas pensions).
  • Your assets (bank accounts, investments, property, vehicles, valuables).
  • Your family home and who lives there.
  • Any debts secured against your assets.

You’ll need to attach supporting documents, such as recent bank statements, superannuation details, property valuations, or pension letters.

Tip: If you get a means-tested income support payment (like the full Age Pension) and you don’t own your home or have significant assets, you may not need to complete this form — but always check with your provider.

Form SA457: Residential Aged Care Property Details for Centrelink and DVA Customers

The SA457 form is used if you have an interest in a home or property. It provides additional detail about your principal residence, including:

  • Property address and value.
  • Who lives there (spouse, dependent child, carer).
  • Whether the property is rented out and how much rent you receive.

This information helps Services Australia determine if your home is exempt or partly counted towards your assets.

How to Lodge the Forms

You can get the forms from:

  • The Services Australia website.
  • Your aged care provider — they can often help you with paper copies.
  • Centrelink service centres.

Return the forms and any supporting documents as soon as possible. If you do not complete the assessment, you may be asked to pay the full costs of care and accommodation, which can be significantly higher than what you’d otherwise be assessed for.

How the Information is Used

Services Australia uses your forms to:

  • Calculate your means-tested contribution for care costs.
  • Work out if you’re eligible for government help with accommodation payments.
  • Inform your provider about how much they can charge you and how much they will receive in subsidies on your behalf.

You’ll get an outcome letter explaining your assessed fees. If your circumstances change, you should notify Services Australia, as your fees may be adjusted up or down.

What Happens If Your Situation Changes?

Your means-tested fees may change if:

  • Your income changes (for example, if you start or stop receiving rental income).
  • Your assets change significantly (for example, you sell your home or investments).
  • Your marital status changes (such as separation or bereavement).

Reviews happen automatically, usually quarterly, but you should always inform Services Australia if you know about a major change that may affect your assessment.

Common Questions About Means Testing

Do I have to sell my home? No. You are not required to sell your home to move into residential care. However, the value of the home may be included in your assets up to the capped amount if no protected person lives there.

Can I dispute my assessment? Yes. If you believe your income or assets have been incorrectly assessed, you can request a review through Services Australia.

What if I don’t complete the assessment? You may have to pay the maximum accommodation payment and means-tested fees until you do. Completing the forms gives you the best chance of accessing subsidies you are eligible for.

Tips for Families

Here are some practical suggestions to help you get your means test right:

  • Start early — the process can take several weeks.
  • Gather all financial documents before completing the forms.
  • Get help from a trusted family member or financial adviser if you need it.
  • Always read your Resident Agreement and Accommodation Agreement carefully before signing.
Tip: Many people use specialist aged care financial advisers to plan the best way to pay accommodation payments and manage how their assets are assessed. It can save money in the long term.

Where to Get More Information

For more details about income and assets testing for residential aged care, visit:

  • Services Australia
  • My Aged Care
  • Speak with your chosen residential care provider’s financial officer.
  • Consult an independent aged care financial planner.

Final Thoughts

Income and asset testing plays a vital role in Australia’s aged care system. It ensures that subsidies reach those who need them most and that older Australians can receive the support they need without unnecessary financial stress.

While it can feel overwhelming, knowing what to expect — and how to complete your SA485 and SA457 forms accurately — helps you plan ahead and avoid unexpected costs. The good news is that protections, caps, and clear rules exist to ensure fairness and transparency.

At OMS, we believe that good information makes for better aged care choices. For more on how fees work, see our other guides on Residential Care Fees and Deeming Rules. If you’d like help understanding your unique situation, speak with a qualified adviser or reach out to us for tailored support.

With knowledge, planning, and the right advice, you and your family can approach aged care with confidence and peace of mind.