(1) Capital repayment deductions apply in respect of a residential care service if:
(a) the approved provider is granted * extra service status under Division 32 in respect of the service, or in respect of a * distinct part of the service; and
(b) the Commonwealth has previously made capital payments in respect of the service, whether or not the payments were made to that approved provider; and
(c) the payments have not been repaid to the Commonwealth.
The capital repayment deductions are applied in accordance with an agreement entered into under this section.
(2) The Secretary may, on behalf of the Commonwealth, enter into an agreement with the approved provider, under which:
(a) amounts equal to the capital payments made in respect of the service are to be deducted from amounts of * residential care subsidy otherwise payable to the approved provider in respect of the service; and
(b) so far as amounts are so deducted, the approved provider ceases to be liable to the Commonwealth for repayment in respect of the capital payments.
Note: Entering into such an agreement may be a condition of the granting of * extra service status (see paragraph 32-8(5)(b)).
(3) However, only a proportion of the amounts equal to the capital payments made in respect of the service are to be deducted under the agreement if:
(a) * extra service status is granted only in respect of a * distinct part of the service; or
(b) some or all of the capital payments were made more than 5 years before the first of the deductions is to be made; or
(c) the circumstances (if any) specified in the Subsidy Principles apply.
The proportion is to be worked out in accordance with the Subsidy Principles.
(4) The agreement must provide for the deductions to be completed within 3 years after the making of the first deduction.
(5) In this section:
"capital payment" means:
(a) a * residential care grant; or
(b) a payment of a kind specified in the Subsidy Principles.