Aged Care Deeming Rates 2026: How Financial Assets Affect Your Fees

When Services Australia calculates how much your parent will pay in means-tested aged care fees, they don't look at the actual income earned from financial assets. They apply a set of assumed rates — deeming rates — that treat all financial assets as though they're producing a standard return, regardless of whether the money sits in a zero-interest savings account or a managed fund returning 8%.

This matters because the deemed income flows directly into the aged care income test, which determines the Hotelling Contribution and Non-Clinical Care Contribution your parent pays on top of the universal Basic Daily Fee.

Current Deeming Rates (2026)

As of 1 July 2026, the deeming rates applied by Services Australia are:

• Lower deeming rate: 1.25% — applies to financial assets up to the threshold
• Upper deeming rate: 3.25% — applies to financial assets above the threshold

The thresholds that determine where the lower rate ends and the upper rate begins:

• Singles: $66,800
• Couples (combined): $110,600

So for a single person with $300,000 in financial assets, the deemed income calculation works like this:

• First $66,800 at 1.25% = $835
• Remaining $233,200 at 3.25% = $7,579
• Total deemed income: $8,414 per year

That $8,414 is treated as income for both the Age Pension income test and the aged care means-tested fee calculation — even if the actual return on those assets was lower (or higher).

What Counts as a Financial Asset for Deeming

Deeming applies to financial assets specifically, not all assets. The distinction matters:

Financial assets (deemed): Bank accounts, term deposits, managed funds, shares, bonds, superannuation (if pension age), account-based pensions, allocated pensions, loans to others, and certain insurance policies with a cash surrender value.

Non-financial assets (not deemed): The family home, personal effects, cars, real property other than the home (assessed at net market value — rental income is counted separately under the income test), and a Refundable Accommodation Deposit paid to an aged care provider.

The RAD exclusion from deeming is significant. A RAD is exempt from the Age Pension assets test entirely and is not subject to deeming for income test purposes. However, the RAD is still counted as an assessable asset under the aged care means test — it just doesn't generate phantom deemed income.

How Deeming Feeds Into Aged Care Fees

Under the post-1 November 2025 fee framework, your parent's total assessable income (including deemed income from financial assets) determines their Means-Tested Amount (MTA). The MTA then dictates two fees:

Hotelling Contribution — up to $22.15 per day, with no lifetime cap. Calculated based on the MTA minus the Maximum Accommodation Supplement ($72.30). If the MTA is low enough, no Hotelling Contribution is payable.

Non-Clinical Care Contribution (NCCC) — up to $107.32 per day. Only triggered if the resident is already paying the maximum Hotelling Contribution and their assessable assets exceed $532,055. Capped at $137,917.01 lifetime or four years of cumulative payments.

So the pathway is: financial assets → deemed income → total assessable income → MTA → means-tested fees. Every dollar above the deeming threshold generates 3.25 cents of phantom annual income, which can push a resident from a partial Hotelling Contribution into maximum Hotelling plus NCCC.

The Practical Impact: Why Deeming Rates Matter for Care Decisions

The deeming rates create situations where restructuring financial assets before entry into care can reduce ongoing fees. A few examples:

Paying a larger RAD reduces deemed income. Converting cash in a bank account into a RAD removes those funds from the deeming calculation entirely. The RAD still counts toward the aged care asset test, but it stops generating deemed income that would increase the Hotelling Contribution.

Superannuation in accumulation phase is treated differently. Before pension age, super in accumulation isn't deemed at all — it's not assessed. After pension age, it enters the deeming pool. Timing matters.

Gifting to reduce financial assets triggers deprivation rules. Services Australia applies strict limits: $10,000 in any single financial year, $30,000 over a rolling five-year period. Anything above those thresholds is treated as a deprived asset, and the deemed income continues as though the money was never given away.

These interactions are exactly the kind of analysis an aged care financial adviser specialising in this space can model. Our Paying for Residential Aged Care guide includes a Fee Calculation Reference that walks through the deeming arithmetic step by step, so you can run preliminary numbers before deciding whether professional advice is worth the $3,300–$6,600 fee.

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