The Short Answer
No. Aged care fees are generally not tax deductible in Australia. The , , and accommodation payments (and ) are all classified as private living expenses — similar to rent, groceries, or utility bills — and cannot be claimed as tax deductions.
The net medical expenses tax offset, which previously allowed some taxpayers to claim a portion of medical and care costs, was abolished on 1 July 2019. There is currently no tax offset or deduction available for aged care fees.
Basic Daily Fee
The basic daily fee ($61.96/day in 2025–26) is a contribution toward day-to-day living costs — meals, cleaning, laundry, and utilities. The ATO treats this as a personal living expense, comparable to what you would spend on food and housing if living independently.
Tax status: Not deductible.
Means-Tested Care Fee
The means-tested care fee (MTCF) is a variable charge based on your income and assets. Despite being related to “care”, it is not classified as a medical expense for tax purposes. It is a government-determined contribution toward the cost of your personal care services.
Tax status: Not deductible.
RAD and DAP Tax Treatment
Refundable Accommodation Deposit (RAD)
The RAD is a refundable lump-sum deposit. Because it is returned to the resident (or their estate) when they leave care, it is not an expense at all — it is more like a bond. You cannot claim a deduction for money that you will get back.
Importantly, the RAD refund is also not taxable income when returned. It is a return of capital.
Daily Accommodation Payment (DAP)
The DAP is an ongoing daily charge for accommodation, equivalent to paying interest on the RAD amount you haven’t paid as a lump sum. It is treated as a personal living cost (housing expense).
Tax status: Neither deductible (when paid) nor taxable (when refunded for RAD).
The Net Medical Expenses Tax Offset (Abolished)
Until 30 June 2019, some taxpayers could claim the net medical expenses tax offset (NMETO) — a 20% offset on net medical expenses above a threshold. Some aged care costs qualified under this offset.
This offset no longer exists. The government phased it out over several years, and it ceased entirely from 1 July 2019. There is no replacement.
If you see older articles or forum posts suggesting you can claim aged care costs via the medical expenses offset, this information is out of date.
Can Family Members Claim Aged Care Costs?
No. If you are paying for a parent’s or relative’s aged care fees, you cannot claim those payments as a deduction on your own tax return. Australian tax law does not provide for dependant care deductions for adult children paying a parent’s living costs.
This applies regardless of whether you pay:
- The basic daily fee on their behalf
- The RAD from your own savings
- Extra service fees or additional care costs
The only exception is if the aged care costs are incurred as a legitimate business expense — for example, if you are the employer of a live-in carer and the costs relate to your business. This is extremely rare and requires specific tax advice.
Home Care Package Tax Treatment
fees follow the same principle — they are personal living expenses and are not tax deductible. This includes:
- The basic daily fee for home care
- Any income-tested care fee
- Top-up fees for additional services beyond the package budget
The government subsidy received through the Home Care Package is also not assessable income — it goes directly to the provider, not to you.
Summary: What Is and Isn’t Deductible
| Cost | Tax deductible? | Taxable when received? |
|---|---|---|
| Basic daily fee | No | N/A |
| Means-tested care fee | No | N/A |
| RAD (lump sum) | No | No (refund is return of capital) |
| DAP (daily accommodation) | No | N/A |
| Extra service fees | No | N/A |
| Home care package fees | No | N/A |
| Net medical expenses offset | Abolished from 1 July 2019 | |