Senior man in the park

Having ‘capacity’

‘Capacity’ is a term often used when talking about a person’s ability to make decisions for themselves and understand the consequences of those decisions.

Last updated: 7 February 2022

‘Capacity’ is a term often used when talking about a person’s ability to:

  • make decisions for themselves and

  • understand the consequences of those decisions

People aged over 18 are usually deemed to be legally able to make every decision, big and small, for themselves and to accept the consequences of these decisions. This is called ‘having capacity’.

For people under 18, others (usually parents or other caregivers) make their decisions at first, but as they grow and mature they gradually take on making their own decisions. So, they develop capacity by the time they reach adulthood.

While a few people may never have capacity (perhaps, for example, due to a disability), most people will develop capacity and maintain it throughout their whole life.

Other people may, at some point in life, become no longer able to make their own decisions. This is called ‘losing capacity’. It can happen at any age through accidents or illnesses, or it can happen through the neurological effects of ageing that some people experience in later life.

Close-up of old man sitting alone

What is capacity?

Australia’s states and territories each have slightly different definitions of ‘capacity’ or use different terms for it, but there are some basic concepts that are common across the country.

A person has capacity if they can:

  • understand the facts relating to the decision

  • understand the main decision that needs to be made

  • weigh up the consequences of the decision

  • understand the consequences of the decision

  • communicate the decision

People may have trouble communicating their decision for many reasons, but that doesn’t mean they can’t communicate at all. They should be provided with whatever they need to be able to convey their decision.

For example, a person who has a physical disability that makes speech or communication difficult can still have capacity, and speaking aid technology might enable them to communicate their decisions.

Someone who speaks a language other than English should be provided with an interpreter, so that they can get the information they need and communicate their decisions in their preferred language.

Is losing capacity always total?

No. It can be partial. A person’s capacity IS ‘decision-specific’, which means that they might have capacity to make some decisions but not others.

For example, they might not have capacity for big decisions like selling their home and buying another, but they can manage a simple day-to-day budget (such as their Centrelink pension) and make smaller decisions, like what they want to do each day and how much to spend on birthday presents.

For a person with decision-specific capacity, their enduring power of attorney might never be enacted. If they are able to make day-to-day decisions and don’t ever need to make big decisions (for example, if their housing and care arrangements are already settled), there would be no reason for their enduring power to take effect. This is because they still have capacity to make the decisions that they need to for themselves.

NB. Using an agent is not indicative of a loss of capacity.

For example, asking your son to pay your electricity account at the bank, or using a tax agent to lodge your tax returns, does not mean you do not have capacity.

Is loss of capacity always permanent?

No, capacity can fluctuate, because its loss may depend on a range of factors.

Sometimes a person’s loss of capacity is due to a condition that comes and goes, such as schizophrenia.

Sometimes it relates to the time of day – for example, a person with dementia may have capacity most mornings, but it decreases as the day grows later.

A person who loses capacity while they are in hospital having surgery, recovering from an infection or after an accident may regain capacity over time.

It is recommended that you engage with a treatment team if you have a diagnosed condition, such as severe depression, schizophrenia, or dementia.

Senior woman is visited by her doctor or caregiver at home

Why is capacity important?

Capacity is a fundamental concept supporting individual personhood, autonomy, from which respecting individual decision-making flows. Capacity is an important factor in a person’s future planning because an assessment that they have impaired/lost capacity usually sets their enduring power of attorney into effect.

Losing capacity is not an uncommon experience (for example, Dementia Australia says there are almost half a million Australians living with dementia). Understanding capacity and talking about it can help people prepare for the possibility of its loss.

Conversations about capacity, personal values and decision-making preferences are important for ensuring that someone has the best chance of planning for their future and putting safeguards in place for their wellbeing and security.

Talk about capacity now

Sometimes, losing capacity can leave people vulnerable to not being supported and looked after, but talking with others about their preferences and values while they still have capacity can help to ensure future support, respect and care that aligns with their wishes.

If you talk with family and friends about now your capacity, your personal values, and how you would make financial decisions, they will have a better idea of what you would want done if you lose capacity. As a result, they will be less likely to inadvertently make a decision for you in the future that you don’t like, isn’t right for you, or doesn’t align with your values.

Remember to talk to your family and friends about where your enduring power of attorney (EPOA) is.

And when people have chosen attorneys they can trust, an enduring power document is a great safeguarding tool.

How do you determine whether someone has lost capacity?

Deciding whether a person has capacity can be very challenging. The first principle for assessing a person’s capacity is to assume that they have the capacity to make all decisions about themselves until it is established that they don’t.

Sometimes it’s obvious that their decision-making ability has diminished, and everyone – including the person themselves – agrees.

Other times, it’s not so simple. The person may have capacity for some decisions but not others, which makes it harder to judge the extent of their capacity. Or they may not understand (‘have insight’) themselves that they have lost capacity, even though it’s clear to their family and friends.

Determining whether a person has capacity can be as simple as asking a lawyer or GP to conduct a review or obtaining opinions from experts such as geriatricians, psychiatrists or neuropsychologists.

In some states in Australia, the determination is made between everyone involved, while in other states, an administrative tribunal decides.

The New South Wales Department of Communities and Justice (Justice NSW) has a great guide to assessing capacity in their toolkit (click here), with examples of questions that may be asked, such as:

  • ‘How did you reach your decision?’

  • ‘What things were important to you when you were making your decision?’

  • ‘How did you balance those things when you were making your decision?’

Generally, no one is very good at judging whether they’re likely to lose capacity. This short film talks about the likelihood of it happening to us.

What if you don’t agree with the determination?

Because making assessments of capacity can be extremely difficult, it’s not uncommon for people to disagree with decisions, whether they’ve been made about themselves or other people.

In most states, if there is no agreement about a person’s capacity, an application will be made to the state’s Civil and Administrative Tribunal, usually under its guardianship jurisdiction. When this happens, medical assessments can be undertaken and used by the tribunal to determine capacity.

Sometimes, there will be conflicting evidence and competing assessments of the person’s capacity. In this case, the tribunal member will make the best decision possible.

If you still don’t agree with the decision, you may be able to appeal for a review, but this can be very costly and time-consuming.

Disclaimer: The information provided on this website is not a substitute for individual legal advice.

Download PDF version

You can download a PDF version of Having ‘capacity’here.

More information on powers of attorney

Senior woman and adult daughter

Introduction to enduring power of attorney

Sometimes, older people may become less able to make decisions for themselves. If you lose the ability to manage your o...

Middle aged couple and their dog

Future planning

Future planning is about taking steps now to maximise your independence and wellbeing in older age.

Senior woman with adult daughter

Being an attorney

An attorney has both the duty and the privilege of enabling another person to live the life they wanted to lead by unde...

Senior woman drinking tea with adult daughter

Choosing an attorney

The person you appoint as your attorney in your enduring power of attorney may need to make important financial decisio...

Senior couple reading from tablet

LGBTQIA+ people and enduring power of attorney

It is critical that LGBTQIA+ people appoint an attorney who will respect their sexuality and/or gender identity when ma...

Portrait of smiling older male

Your rights and enduring power of attorney

Everyone has recognised rights that don’t expire as you age, regardless if you live alone or with others, have capacity...

Senior couple sitting on a park bench

Helpful terms to know

The following are terms that you’ll find as you read information about powers of attorney. Some terms are the same acro...

Senior woman on the phone

Frequently asked questions

Even if you have an idea of what enduring powers of attorney are and how they can help you, you may still have question...

Senior couple

Powers of attorney in each state and territory

Every Australian state and territory has different rules governing powers of attorney. You will find specific informa...