Aged care peaks and Labor cry foul on Government’s $235M COVID-19 retention bonus after fine print reveals payments will be taxed

Bad news for providers and staff planning to apply for the Federal Government’s long-awaited $234.9 million COVID-19 ‘retention bonus’ for residential care and home care workers due to open this month. Aged Care Minister, Senator Richard Colbeck, had announced on 20 March – over eight weeks ago – that the payments would see residential care workers paid up to $800 after tax, while home care workers would take home up to $600 after tax, over two quarters originally in June and September. But under the guidelines for the bonus released late on Friday, the payments will be subject to income tax when paid to the employee.

“This is consistent with other COVID-19 measures, such as the JobKeeper payment,” the fact sheet states.

LASA CEO Sean Rooney labelled the move a “broken promise”, estimating the Government is taking “taking at least $50 million out of the pockets of aged care staff”.

“Typical aged care workers, earning between $37,001 to $90,000 a year, will lose over 30 per cent of their payment and perhaps more if they are receiving other means tested benefits or have a HECS debt,” he said.

ACSA CEO Pat Sparrow was similarly blunt, saying the taxing of the payments was “mean-spirited and misleading”.

“Workers were led to believe the payments would be more generous,” she said.

The industry peaks have also been lobbying – to no avail – for the payments to be extended to all staff working in residential aged care, including laundry workers, cleaners, cooks, drivers and reception staff – currently only direct care workers in residential care can receive the bonus. Labor’s Shadow Minister for Ageing, also blasted the ‘backflip’, saying the bonus has been “botched from the start” with thousands of staff locked out of the payment.

“The Morrison Government must explain to aged care workers why it has now changed the rules,” she said on Twitter.

We approached the Government about the criticism however, and they confirmed there are no plans to back down on the new arrangements.

“The amount of tax an individual pays will depend on their marginal tax rate,” a Department of Health spokesperson told us. “There are no plans to change eligibility arrangements.”