Last week’s Federal Court ruling against Regis’ Asset Replacement Charge (ARC) has had wide-reaching consequences, with both ASX-listed providers announcing they will refund millions of dollars to residents – with accrued interest.
Japara’s share price dropped from $2.01 to $1.87 after the company revealed it decided to refund its Capital Refurbishment Deduction (CRD) charged to residents since in 2015 – a total of $4.66 million.
Unlike Regis, Japara had not made a provision in its profit forecast for a ruling against the fee and says it now expects its FY18 EBITDA to be 14-19% below FY17 – a considerable hit.
Both providers had continued to charge the fee after the Department of Health warned in September 2016 that it was not supported by the Aged Care Act.
They are not the only providers caught out by the Court’s decision.
Many providers introduced refurbishment fees after $1.2 billion was cut from aged care funding in 2016. Estia had also charged the fee, but stopped after the Department warning.
The Australian reports that other providers charging similar fees including McKenzie Aged Care are also now voluntarily refunding residents.