What could proposed tax changes mean for aged care?

August 27, 2015 | Aged Care Finance

What could tax changes do for aged care?

It's no secret that many industries both in Australia and around the world depend on government funding to remain afloat. Down Under, aged care has a heavy reliance on continued government support.

This means that any changes coming into effect can often have significant consequences.

It was just recently that the announcement came the Payroll Tax Supplement would be removed from aged care, an adjustment which meant a $652 million loss for the industry. While certainly a substantial detriment, renewed tax arrangements could be on the way in the near future.

Aged care has a heavy reliance on continued government support.

Chief Executive Officer of Leading Age Services Australia (LASA) in Victoria, Trevor Carr, came forward to welcome potential tax arrangement reforms. Federal Treasurer Joe Hockey has suggested interest in doing so following the Payroll Tax Supplement cut.

In what could be a source of further issues, Mr Carr explained that he is now also concerned that the treasurer could offset this Tax Creep income tax cut by putting GST in place for the health sector. He said that there is something unfair about imposing higher fees on health services. In effect, leaving the vulnerable with the task of balancing the budget.

If the proposed tax adjustments go ahead, then health service costs could increase for 3.1 million Australians shortly in the 64 to 84 age bracket. By 2055, with the elderly population continuing to grow, 7.0 million Australians could be affected.

"LASA Victoria calls on the Federal Government to take the lead and fully reform the current tax system and not place the burden of funding revenue shortfalls on those who have already done the heavy lifting in our community," Mr Carr explained.

He finished by saying that the removal of the payroll tax supplement is now creating an imbalance in the sector, leaving a substantial number of people to absorb the cut.

Such changes are evidence of the fact that aged care needs to put stronger financial sustainability practices in place, in order to mitigate the effects of tax cuts and legislation adjustments.

Of course, funding can come from other areas, even the government. The Home and Community Care programme in Victoria, for example, will deliver support in the form of 200,000 care hours. This is part of a larger $681 million investment that's being made with the Victorian government.

What do you think are the biggest opportunities for success in the aged care industry today? Please contact us and let us know!

What could tax reform do for aged care?What could tax reform do for aged care?