Aged care providers in Australia deal with one of the most complex funding environments of any sector — multiple government income streams that arrive on different schedules, each with its own reconciliation requirements, GST treatment, and audit trail obligations. The shift from ACFI (Aged Care Funding Instrument) to AN-ACC (Australian National Aged Care Classification) for residential providers, and the Consumer Directed Care model for home care packages, has added reporting complexity on top of an already demanding compliance environment. Bookkeeping for aged care providers requires someone who understands how government subsidies are classified, how consumer contributions interact with package funds, and how payroll under the Aged Care Award works — before any of the standard business accounting even begins.
Government funding streams and how they’re treated in the accounts
Aged care providers typically receive income from two or three distinct government sources, each requiring separate treatment in the accounting software:
Residential care — AN-ACC subsidies. From 1 October 2022, the AN-ACC funding model replaced ACFI for residential aged care. The Department of Health and Aged Care calculates a daily subsidy rate per resident based on their AN-ACC classification (Base Care Tariff + AN-ACC Tariff). These subsidies are paid fortnightly by Services Australia directly to the approved provider. In Xero or MYOB, AN-ACC payments are non-GST income — aged care is GST-free under Division 38-B of the GST Act. Each fortnightly payment needs to be reconciled against the resident schedule to confirm the payment matches expected subsidy levels.
Home Care Packages — CDC model. Under Consumer Directed Care, the Home Care Package (HCP) subsidy is paid by the government monthly in arrears into the provider’s trust-like package account. The provider holds the funds on behalf of the consumer — it’s not income until services are delivered and funds are drawn down. The bookkeeping requires tracking each consumer’s unspent balance (a liability, not income), recording monthly drawdowns as services are delivered, and reconciling the government subsidy received against the drawdown activity. HCP basic daily fees collected from consumers (currently up to $13.32/day for Level 4) are also GST-free.
CHSP (Commonwealth Home Support Programme). Block-funded separately from HCPs. Providers receive a grant amount, acquit it annually, and record it as grant income — not fee-for-service revenue. If CHSP and HCP income are lumped into a single income account, the acquittal process becomes a reconstruction exercise.
⚠ Critical Accounting Point
Unspent Home Care Package funds are a liability, not income
Government HCP subsidies received but not yet spent on consumer services must sit as a liability on the balance sheet — they belong to the consumer. Recording them as income when received overstates revenue and creates reconciliation problems at the monthly statement date. The income is recognised when services are actually delivered and the funds are drawn down against the package.
GST in aged care: what’s exempt and where the exceptions are
Most residential and home care services provided by approved aged care providers are GST-free under Division 38-B of the GST Act. This includes personal care services, nursing care, domestic assistance, and meals provided as part of the care program. The exemption applies to approved providers — not all community care organisations automatically qualify.
Where GST does apply:
- Services sold beyond the approved care program (e.g. hairdressing, excursions, premium accommodation extras in residential care) — generally taxable
- Lease or rental of equipment to consumers not directly connected with an approved care service
- Ancillary fees charged for non-care services (e.g. internet, pay TV in aged care facilities)
This means a provider’s BAS will typically carry a mix of GST-free income and taxable supplies — extra services, rental income, and ancillary charges. Separating income streams in the chart of accounts is the foundation of a clean BAS. See the BAS and ATO page for quarterly deadline and lodgement detail.
Aged care payroll: the Aged Care Award and pay rates
Personal care workers, assistants in nursing, and residential support staff are covered by the Aged Care Award 2010 (MA000018). This is one of the more complex Awards for payroll purposes — multiple streams, multiple classification levels, and specific provisions for sleepover shifts, broken shifts, and evening/night penalties.
Key payroll features under MA000018:
- Classification levels from Level 1 (entry personal care) to Level 5 (senior care roles)
- Casual loading of 25% on top of the base rate for casuals
- Afternoon penalty: 15% loading for ordinary hours between 6pm–midnight
- Night shift penalty: 30% loading for ordinary hours between midnight–6am
- Saturday: time-and-a-half; Sunday: double time
- Sleepover allowance for residential aged care: specific flat rate per sleepover shift (check Fair Work’s current Award schedule)
- Superannuation at 11.5% (rising to 12% from 1 July 2025) on ordinary time earnings
On top of Award compliance, aged care providers with 15 or more employees are required to report payroll data to the Workplace Gender Equality Agency (WGEA) — a reporting obligation that trips up providers who first hit the threshold during rapid growth. See the outsourced payroll services page for payroll processing and STP lodgement.
Aged Care Award MA000018 — Key Penalty Rates
- Afternoon (6pm–midnight): +15% of ordinary rate
- Night shift (midnight–6am): +30% of ordinary rate
- Saturday: 150% of ordinary rate
- Sunday: 200% of ordinary rate
- Public holidays: 250% of ordinary rate
- Casual loading: 25% on base rate, applied before penalties
- Sleepover shift: flat allowance rate per shift (check Fair Work schedule)
Consumer statements and unspent funds reporting
Home care providers are legally required to provide monthly statements to each consumer showing the package funds received, services delivered against those funds, the provider’s fees and charges, and the unspent balance remaining. This is not a Xero report — it requires a consumer-level view of package activity that sits between the scheduling system and the accounting software.
The bookkeeping role is to ensure that the drawdown coding in Xero accurately reflects what the scheduling system shows as delivered. When the monthly statement is prepared (often by the care coordinator), the financial figures need to agree with the accounting records — specifically, the liability balance per consumer must match the package balance shown on the statement. Discrepancies accumulate quickly if bank reconciliation and drawdown coding lag behind service delivery.
Providers are also required to return unspent HCP funds to Services Australia when a consumer exits the package — either to a new provider or because they’ve entered residential care, gone into hospital, or passed away. Exit reconciliation is a specific bookkeeping task that involves confirming the final balance, processing the return payment, and closing the consumer’s account in the accounting software.
What Free My Cloud handles for aged care providers
✓ AN-ACC / HCP subsidy reconciliation
✓ Consumer unspent balance tracking (liability)
✓ GST-free vs taxable income coding
✓ BAS preparation quarterly
✓ Aged Care Award payroll processing
✓ Penalty rate and sleepover coding
✓ CHSP grant acquittal preparation
✓ Monthly P&L by funding stream
We work in Xero or MYOB alongside your care management system. For NDIS-registered providers also operating in the disability sector, see the NDIS bookkeeping page. Use the savings calculator or contact us directly.
For broader accounting obligations that apply to aged care organisations as incorporated entities — tax returns, ASIC reporting, audit requirements — see the accounting services overview and the taxation and compliance page.
HCP subsidies received from the government are not income when received — they’re a liability representing funds held on behalf of the consumer. The income is recognised when services are actually delivered and funds are drawn down from the package. Each consumer should have a separate liability account (or sub-account) tracking their unspent balance. The liability is extinguished when funds are drawn against delivered services or returned to Services Australia on exit.
Most services provided by approved aged care providers under the My Aged Care system are GST-free under Division 38-B of the GST Act. This covers residential personal care, home care services delivered under Home Care Packages, and CHSP-funded domestic assistance. Add-on services sold outside the funded program — hairdressing, premium extras, non-care ancillary fees — are generally taxable and need to be coded separately in the BAS.
Personal care workers, assistants in nursing, and support staff in residential and home care settings are covered by the Aged Care Award 2010 (MA000018). The Award has multiple classification levels and includes specific provisions for sleepover allowances, afternoon and night shift penalties, and broken shift allowances. Registered nurses may be covered by the Nurses Award 2020 (MA000034) depending on their role.
ACFI (Aged Care Funding Instrument) was replaced by AN-ACC (Australian National Aged Care Classification) from 1 October 2022. Under AN-ACC, resident classifications are assessed by independent assessors (not the provider), and the daily subsidy rate is set based on the AN-ACC classification tariff. Providers receive fortnightly subsidy payments from Services Australia based on resident census and classification. The bookkeeping shift is from claim-based income recognition to schedule-based reconciliation.
Yes. When a consumer exits a Home Care Package — by transferring to another provider, entering residential care, or passing away — the provider must return any unspent package funds to Services Australia within 70 days. Exit reconciliation is a specific bookkeeping task: confirm the final unspent balance, process the return, update the consumer ledger to zero, and code the outgoing payment correctly against the liability account.
