In September 2021, the Department of Health released a discussion paper Improving Choice in Residential Aged Care – ACAR Discontinuation. The focus of consultation is on the transition to the new arrangements and their implementation; the focus is not on whether the bed licences will be discontinued.  The discussion paper indicates that a large number of new bed licences remain available to be allocated at no charge in the period until 1 July 2024 and that a large number of provisional places will also be available. There may also be some trading in licences, or acquisitions of businesses that hold licences, in order to secure market, share ahead of 1 July 2024.

The bed licenses reform aims to remove significant barriers which prevent new aged care providers from entering into the market, in order to drive increased competition and provide greater choice for senior Australians in selecting the aged care providers that would best meet their needs. Under the proposed new regime, government support funding will be allocated based on the number of places that can be provided by aged care providers, depending on the market demand in an assigned place. Aged care providers should consider how the discontinuation of the current licencing regime may affect any bed licence intangible assets appearing on their statements of financial position in the lead up to 1 July 2024. In particular, aged care providers should consider the following accounting implications:


  • Most aged care providers assign an indefinite life to their bed licenses.
  • The announcement that bed licenses will not exist after 1 July 2024 means that the useful life assigned to the licenses should not extend past this date.
  • Amortisation should be recorded in the statement of profit and loss and other comprehensive income.


  • The removal of bed licences is an impairment indicator.
  • Recoverable amount should be estimated using fair value or value of use for the cash generating unit (CGU) to which the bed licences belong.
  • If the estimated future cash flows from the cash generating unit are less than the carrying amount of the assets in the CGU, the assets will need to be written down based on their carrying amounts.

Required disclosures for financial statements

Since the disclosures relating to the bed licenses are intangible assets they will need a specific assessment due to the changes in the economic life and its value because of the reforms.

The changes in the useful life of the bed licenses will be accounted as a change in the accounting estimate under AASB 108 Accounting Policies. At the very least, aged care providers are required to disclose the following on financial statements

A) The nature and amount of a change in an accounting estimate that has an effect in the current period or is expected to have an effect in a future period.

B) If the amount of the effect in the future period is not disclosed because estimating it is impracticable, aged care providers should disclose that fact.

If you have questions regarding the above information, do not hesitate to contact our Audit & Assurance Team | 08 6165 4000

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