What is the policy on gifting?
The Social Security (Long-Term Residential Care) Regulations 2005 prescribe the allowable gifting and the gifting period for the purposes of financial means assessments.
Currently the maximum amount that a person or their spouse can gift over the period of five years prior to the date of the person’s financial means assessment, without it affecting the income and asset test is up to $6500 per year. This amount will be reviewed on 1 April each year taking into account Consumers’ Price Index adjustments for the previous calendar year. The gifting adjustments will occur in $500 increments.
Gifting is assessed by looking at the date of the financial means assessment and looking at the amount gifted in each of the previousfive years.
If the person has not gifted the maximum allowable (allowable gifting) at the time of application for a financial means assessment, they may make a further gift up to the amount of the five-year limit, to a person who has provided a high level of care prior to the person applying for a means assessment.
You may be aware that gift duty was recently abolished for dispositions of property under the Estate and Gift Duties Act 1968. It is important to note that the rules for gifting under the Social Security (Long-Term Residential Care) Regulations are separate from those under the Estate and Gift Duties Act 1968 and you must consider your obligations under each piece of legislation separately.
Gifts made outside the current and to be prescribed five-year gifting period are generally not included in the financial means assessment unless the gifting is considered extraordinary (ie, it is an asset for the purposes of the financial means assessment as there has been deprivation of property).
What is extraordinary gifting?
Extraordinary gifting is gifting of a nature beyond what would be considered ordinary or normal.
Criteria for determining extraordinary gifting includes:
- the period over which the gifting occurred – when it started and the frequency;
- the value of the gifting and whether it was made in a lump sum or by periodical payments;
- the nature of the income or asset gifted; and
- to whom the gift was made, and the relationship of the recipient to the resident.
