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Residential Care Subsidy
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Some people set up a family trust to receive residential care subsidy when they get old. By setting up a trust they dispose their interest in an asset to be eligible to receive subsidy. With changing rules of social security it is getting harder to get residential care subsidy.
With the abolition of gift duty you can gift as much as you want and there will not be any tax duty. However, for residential care subsidy there still is a maximum level of gift per couple is $26,000.
What is residential care subsidy?
Residential care subsidy is paid to rest homes or hospitals directly for entitled people by the Ministry of Health.
You can get it if you,
· have had an assessment of your individual needs that confirms you need long-term residential care in a rest home or hospital and
· need this care for an indefinite length of time and
· are aged 50-64 years, are single and have no dependent child (for you, there is no asset test) or
· are aged 65 years or over and your assets are within certain limits and
· are receiving contracted care services.
Asset threshold
There is an asset threshold which limits the maximum asset an applicant can have in order to get the subsidy. From 1 July 2014, people who
· Do not have a spouse or have a spouse who is also in long-term residential care
o Must have combined total assets valued at $218,423 or less to qualify for Residential Care Subsidy
· Have a spouse who is not in care, can choose a threshold of
o combined total assets of $119.614 not including the value of their house* and car
OR
o combined total assets of $218,423 which will include the value of their house and car
o * The house is only exempt from the financial means assessment when it is the principal place of residence of the spouse/partner who is not in care or a dependent child.
The threshold is adjusted on 1 July each year.
Can I gift assets to meet the asset threshold?
The answer is no. If you give away assets, they still may be counted as assets in your financial means assessment. The social security system operates on the principle that people should look to their own resources first before seeking assistance from the state. Under the Act, all resources are required to be used to help the client support themselves. This approach did not change with the abolition of gift duty.
However, you can gift up to $6,000 within a 12 month period in each of the five years before you apply. This applies to each application for the Residential Care Subsidy.
Gifts of more than $27,000 per year, per application (for couples application too) made before the five year gifting period, may be added into the assessment.
Ref
http://www.workandincome.govt.nz/individuals/a-z-benefits/residential-care-subsidy.html
http://www.workandincome.govt.nz/individuals/brochures/residential-care-subsidy.html
Saurav Wadhwa is a Principal Accountant at IBBZ Accounting Limited
M Bus (TAX) PG Cert (LAW) CA CPA
Membership and Qualification:
- Masters in Professional Business Studies (Taxation) with Distinction from Auckland University of Technology
- Post Graduate Certificate in LAW, Law School at Auckland University of Technology
- Chartered Accountant(CA), New Zealand Institute of Chartered Accountants (NZICA)
- Certified Practicing Accountant(CPA), CPA Australia
- Bachelor of Commerce, Grad. Cert. in Business from Auckland University of Technology
Saurav has many years of practical experience in tax & accounting services and is the co-founder of IBBZ Accounting Limited. He is qualified both in law and accounting. Saurav has worked in various tax & accounting specialist roles for large corporates in New Zealand. He loves to work with Small Businesses.
His key focus is on:
- Tax advisory for small and family operated businesses on a wide range of taxation issues.
- Legitimate tax saving structures.
- Advising on range of new business issues.
- Ensuring business growth is attained.
- Effective cash flow planning.
Saurav specialises in Tax Disputes resolution, Tax Relief applications, Tax Debt resolution/management, and representation in Tax Audit. Saurav can represent you in Taxation Review Authority, in Tax Dispute Court Cases or he can represent you during Tax Audit Investigations.
Blend of skills in Tax laws and accounting, makes him perfect advisor for small businesses and individuals like you. Saurav understands how to safeguard your business from creditors risk, maximise the business growth and pay low taxes. He can be your good strategic and business partner. He is of a friendly nature and easily approachable.
Saurav understands the numbers very well. He is a qualified Chartered Accountant and registered with highest professional accounting bodies of Australia and New Zealand. He can help you to plan for the future to satisfy all your financial needs.
Consumed by a hunger for knowledge, Saurav has never stopped furthering his education or expanding his pool of knowledge. Nothing gives Saurav more satisfaction than assisting his clients to achieve their financial goals. His diligence, passion and accuracy has earned him a reputation as a reliable professional who strives to serve his clients above and beyond the call of his duties.
Saurav was nominated for the Best Accountant of the year and the Young Entrepreneur of the year, and his company IBBZ Accounting won the award of Best Small Business 2014. In 2015 Saurav won the award of Best Accountant of the Year.
In 2017 Saurav was appointed as a committee member to New Zealand Public Practice Board of CPA Australia.
Saurav is a dedicated family man. Saurav is very fond of outdoor activities and enjoys pretty much all outdoor activities: running, bike, motorbike, snorkel, fishing, skiing etc. Saurav, is also a self-confessed workaholic, spends some of his free time thinking about his client’s affairs and forecasting their financial future.
He can be contacted on saurav@ibbz.co.nz or 09 272 8050
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