Aged care HELF GST imposition kept quiet

A significant change to how enhanced services are taxed in aged care has taken effect – with providers only now becoming aware of it.

The introduction of Higher Everyday Living Fee (HELF) agreements has altered the GST treatment of services that were previously exempt under the extra service regime, creating potential pricing and margin risks for operators.

The Department of Health, Disability and Ageing’s 88-page guidance on HELF arrangements makes no reference to GST.

“I think it’s been completely overlooked,” K&L Gates Partner and GST specialist Matthew Cridland told The Weekly SOURCE.

GST change hiding in the transition

The change stems from the transition from the Aged Care Act 1997 to the Aged Care Act 2024, with amendments to the GST framework taking effect from 1 November 2025.

Those amendments were put in place by Minister for Aged Care and Seniors Sam Rae just days before the new Act commenced, as part of what were described as “consequential” legislative updates.

Intriguingly, the changes were implemented without public consultation, with engagement limited to Government agencies including the Department of Health, Disability and Ageing, Treasury and the Australian Taxation Office.

What are the changes?

Under the previous model, providers could charge approved extra service fees for enhanced amenities, with many of those services remaining GST free.

That concession is now over on 1 November.

From 31 October 2026, existing extra service agreements will cease, to be replaced by HELF agreements. Under the updated GST rules, services supplied under HELF arrangements are no longer GST exempt and will be subject to GST where a Higher Everyday Living Fee is charged.

The aim is clearly set out in the Explanatory Memorandum:

“Extra service fees will no longer be able to be charged from 1 November 2026… Extra service agreements… are set to be replaced with higher everyday living agreements… This provision will become obsolete for supplies that are made after 31 October 2026.”

Pricing implications for providers

The change has direct implications for provider pricing.

“In the same way that every business passes on GST… it’ll just be included in their prices,” Matthew said.

However, the structure of HELF agreements limits the ability to adjust pricing once contracts are in place.

Under the new framework, Higher Everyday Living Fees can generally only be increased through annual indexation.

This creates a clear risk for providers that have entered into HELF agreements without accounting for GST.

“If the operator makes a mistake… they can’t go back and change it,” Matthew said.

In such cases, providers may be required to absorb the cost for the duration of the agreement.

Sector reality: lower pricing, slow rollout

Despite media reports of HELF fees of $50-$60 per day, Pride Living Managing Director James Saunders said the average HELF sits closer to $20 per day for non-supported residents, and around $10 per day for supported residents.

He added that while around 52% of providers are now offering HELF – up from around 46% under the old extra service model – many operators have been slow to implement or cautious in pricing.

“There’s definitely providers out there that are sitting on it… it’s not unusual with a new program,” he said.

The GST change also has a fiscal impact.

Based on current uptake and pricing, our back-of-envelope calculations suggest applying GST to HELF could generate an estimated $60 million to $70 million annually for the Government – which is likely to increase.

Shift toward user pays

The change reflects the growing shift toward a user pays model for non-clinical services in aged care.

Core care and accommodation services provided under standard service agreements remain GST free.

However, additional services and amenities – such as upgraded food and beverage offerings, premium products or enhanced room features – will now be treated as taxable where delivered under a HELF agreement.

Residents must opt into these arrangements and cannot be required to enter into a HELF agreement.

Transition deadline approaching

The sector now faces a transition period.

Existing extra service agreements will remain in place until 31 October 2026. After that date, all enhanced service offerings will need to be delivered under HELF agreements, with GST applied.

For providers yet to fully transition, the priority now will be ensuring pricing structures reflect the new tax treatment before agreements are finalised.

If providers don’t price this in from day one, they won’t get another chance – and they’ll be the ones wearing the cost.