A refundable accommodation deposit is no longer always fully untouched during the resident’s stay. Australian Government guidance updated on 16 February 2026 explains a 2% annual retention, calculated daily, for certain residents under the 1 November 2025 fee arrangements, with deductions limited to five years.
The buyer must first establish whether the rule applies to this person. Entry date, prior care status and fee arrangement matter. The provider should then show the deposit balance, retention schedule and any other written deductions separately before the resident chooses a RAD, RAC, daily payment or combination.
Identify the resident’s fee arrangement
Ask the provider to state the applicable arrangement and why, including first residential-care date, any break over 28 days and relevant transition status. Do not assume every post-2025 payment has identical treatment. Keep the provider explanation with My Aged Care and assessment records.
Separate RAD from RAC
Clarify whether the person pays a refundable accommodation deposit or contribution and what government support is expected. Record the exact room, advertised price, paid amount and date. Similar acronyms do not justify combining balances. Every calculation must start with the resident’s actual refundable lump sum.
Calculate the daily retention
Government guidance sets retention at 2% per annum on the current balance, divided by 365. Ask for a worked example using the intended deposit. The daily amount changes when the balance changes. A flat monthly estimate can be useful for budgeting but must reconcile to daily calculations.
Check the five-year limit
Record the date the first refundable deposit was paid and the date the five-year retention period ends. Ask how a transfer or top-up affects the record. The provider should not restart the clock without a lawful basis. Keep statements across moves so a new home can see prior deductions.
List every permitted deduction
Separate retention, DAP or DAC, agreed fees and other authorised amounts. The resident must agree in writing to applicable deductions beyond retention. A broad clause should not become permission for unknown optional services. Ask how each deduction appears and how an authorisation is cancelled.
Model three payment choices
Compare full lump sum, full daily payment and a combination using current rates and retention. Show capital, daily cash flow, remaining balance and five-year total. Obtain financial advice for asset consequences. The provider explains charges but should not treat the biggest deposit as a condition of clinical admission.
Protect a minimum cash reserve
Do not transfer all accessible funds. Budget removal costs, personal expenses, tax, partner housing and emergencies. A refundable balance is not the same as cash available tomorrow. If the resident asks for a partial refund while still in care, government guidance says provider agreement may be a business decision.
Check overcharge correction
The official page says an overcharged retention must return to the deposit balance within 14 days after awareness or a resident request, with recalculation of later amounts. Ask for the correction workflow and statement. Do not accept a future invoice credit that leaves the refundable balance understated without explanation.
Plan transfer or permanent departure
Ask when retention stops, how the final balance is calculated and what notice affects refund timing. Government guidance says providers should not deduct retention after permanent departure. Record destination, final service day, account holder and documents needed. Do not cancel the existing place until the new admission is confirmed.
Read the accommodation agreement
Check room, deposit, retention basis, frequency, statements, other deductions, interest, refund and complaints. Compare the signed wording with the provider’s example. Request corrections before funds move. A sales email cannot safely override a broad final clause.
Compare homes on net accommodation cost
Use the same deposit and expected stay to compare retention, daily payments, room suitability, optional services and refund administration. A lower advertised RAD may not be better if the room is unsuitable. A transparent balance statement is a purchase criterion, not only an accounting detail.
Audit adviser and provider incentives
Ask whether an adviser receives referral or financial-product compensation and whether payment choices affect it. Curalune can select options or offer fuller contact support. Curalune does not guarantee availability or admission and does not provide a personal financial recommendation.
Verify the first quarterly statement
Match opening balance, dates, daily rate, retention, top-ups, other deductions and closing balance. Recalculate a sample period. Query one discrepancy at a time and keep valid fees current. Store the statement because future homes or the estate may need the retention history.
Review after any balance change
A top-up, refund or agreed fee changes the daily retention base. Ask for the effective date and a revised forecast. Check that the old daily amount stops. Repeat the review after room or payment-method changes rather than waiting for the final refund.
Finish a deposit decision sheet
Place fee arrangement, room, RAD or RAC, payment date, 2% rule, five-year end, permitted deductions, reserve and adviser on one page. Label every estimate. The sheet does not replace the agreement, but it shows the true net commitment the family accepted before admission.
Model the retained amount across five years
Ask the provider for a year-by-year illustration based on the actual proposed deposit, not a marketing example. The retained amount is calculated daily on the remaining balance, so a later refund, partial withdrawal or change can alter the dollar path. Record the agreed accommodation price, payment date, balance, daily retention entry and maximum period. Reconcile each statement to the bank transfer. If the provider applies retention to an arrangement that is outside the post-1 November 2025 rules, request the contractual and regulatory basis in writing before accepting the calculation.
Compare retention alongside investment return, liquidity, means-tested fees and exit timing. A larger lump sum can reduce daily accommodation payments but also ties up family capital and creates a different retention base. Ask who receives a refund, what evidence is needed after death or departure and how an overcharge will be corrected. The official guidance says over-retention must be returned to the deposit within 14 days; keep the statement that identifies the error and the date the correction became due.
FAQ
Does the 2% retention apply to every RAD? No. Applicability depends on the resident’s fee arrangement and transition circumstances.
Is the 2% calculated on the original deposit forever? It is calculated on the current balance, which can change after deductions or top-ups.
Can other fees be deducted from the RAD? Only as permitted and, where required, agreed in writing; check the accommodation agreement.
Can Curalune guarantee a room or financial outcome? No. Curalune supports selection and contact but does not guarantee availability, admission or returns.