Commentators have been divided as to whether it is correct for gifts made by a person’s spouse or partner to be taken into account when assessing that person’s entitlement to a residential care subsidy.
The question, which revolves around the correct interpretation of s 9B of the Social Security (Long-Term Residential Care) Regulations has been answered in a test case. The High Court has determined that the correct interpretation of Regulation 9B is that when a single application is made (that is only one party is going into care) gifts made by both parties are taken into account.
In reaching the decision it did, the High Court referred to the Cabinet paper of 12 August 2005 that proposed amendments to the Regulations in force at the time.
The High Court also considered, and rejected, an argument that the amalgamation of gifts made by couples was discriminatory and contrary to the Bill of Rights when compared with the treatment for applicant’s with no partner for whom amalgamation did not apply.
While this decision may be disappointing for couples that have carried out a joint gifting program, it does provide some measure of clarity and certainty. The decision also provides that, in determing a person’s means for means assessment purposes, after the excess gifting and deprivation amounts have been calculated the resultant figure is then divided in two before being added to other assets to complete the means assessment.
However, it is noted that this treatment appears more concessional than the current methodology used by the Ministry of Social Development (MSD). The writer has confirmed with MSD that its current policy is not to divide the amount in two, but for the entire amount to be taken into consideration.
Moving forward, any couples looking at commencing or maintaining a gifting program and who wish to qualify for a residential care subsidy may wish to consider ensuring that together they do not gift more than $27,000 annually. That said, as residential care subsidies are not the only matter to take into account when gifting, care to maintain a balanced view of the reasons for gifting is also important. Further, if the application is a joint application, the couple is permitted to gift $27,000 each per annum. Finally, it cannot be assumed that the current regulations (even with the more astere interpretation having been confirmed) will remain in the current form. In this regard it is noted that the thresholds for determining entitlement to residental care subsidies were revised down this year.
This decision was up-held on appeal.