IntroductionAustralian occupational therapy practice in residential aged care facilities has been largely funded using the Aged Care Funding Instrument since March 2008. Literature indicates that the funding model constrains occupational therapy practice, impacting on therapists' and residents' experiences. In preparation for the implementation of the new funding model, the Australian National Aged Care Classification, it is timely to understand current practice. Therefore, the aim of this study was to explore occupational therapy practice in residential aged care facilities under the Aged Care Funding Instrument. The objectives were (1) to understand occupational therapists' experiences of working in residential aged care facilities under the Aged Care Funding Instrument; and (2) to explore occupational therapists' perceptions of how the Aged Care Funding Instrument influences residents' occupational performance and engagement.MethodsA phenomenological research design was employed to understand therapists' perspectives. Data were collected from seven occupational therapists using a demographic form and a semi‐structured interview. Data were analysed using a modified Colaizzi's descriptive phenomenological data analysis. Ethics approval was obtained.FindingsTwo themes emerged from the study's findings: a restrictive practice context that disables residents; and a restrictive practice context that inhibits occupational therapists. The first theme describes how the Aged Care Funding Instrument constrains practice and incentivises the disabling of residents. The second theme describes the challenges faced by occupational therapists throughout their journey of employment under the funding model.ConclusionOccupational therapists perceived that the Aged Care Funding Instrument restricts occupational therapy practice and prevents residents from living occupationally rich lives. With the introduction of the Australian National Aged Care Classification in late 2022, it is crucial that national associations and employers advocate to policymakers to ensure future practice reflects the profession's unique knowledge and skills to optimise the health and wellbeing of residents.