Gift duty has been abolished so gifts of any amount may now be made without incurring any duty. So does this mean that we can all gift without any consequences?
The answer is no. This is because there are other regulations that were not changed. When considering applications for rest-home care subsidies, the Ministry of Social Development will take into account any gifts made in excess of $27,000.00 in any one year by a single person or an associated couple (i.e. $13,500.00 each).
If you wish to retain any future entitlement to a rest-home care subsidy, then we recommend that you make annual gifts of $27,000.00 only.
If you are not concerned about retaining any future rest-home care subsidy, then you can elect to gift to any person or forgive to your Trust any balance of the debt owing in full thereby extinguishing the debt.
Another limit on gifting relates to insolvency as those rules have not changed. Any gift made within two years of a bankruptcy could be set aside. It is not possible to protect property by gifting it to avoid it falling into the hands of your creditors.
The answer is no. This is because there are other regulations that were not changed. When considering applications for rest-home care subsidies, the Ministry of Social Development will take into account any gifts made in excess of $27,000.00 in any one year by a single person or an associated couple (i.e. $13,500.00 each).
If you wish to retain any future entitlement to a rest-home care subsidy, then we recommend that you make annual gifts of $27,000.00 only.
If you are not concerned about retaining any future rest-home care subsidy, then you can elect to gift to any person or forgive to your Trust any balance of the debt owing in full thereby extinguishing the debt.
Another limit on gifting relates to insolvency as those rules have not changed. Any gift made within two years of a bankruptcy could be set aside. It is not possible to protect property by gifting it to avoid it falling into the hands of your creditors.
Rest home subsidies – the myth
It appears that there is a lot of confusion about what assets remain safe from government claw back if a rest home subsidy is granted. One common myth is that you should have as expensive a property as you can afford because your residence cannot be "charged" for repayment of rest home subsidies. In part this is correct if one partner is remaining in the family home and the partner applying for the assessment elects option (a) below.
If you do not have a partner or your partner is already in residential care then the home is not exempt. You will only qualify for assistance by way of rest home subsidy if you have assets equal to or less than $213,297.00.
If you are applying for a subsidy and your partner is remaining in the family home as a principal place of residence then you can choose an assessment on either:
(a) total assets of $116,806.00 (excluding the home and car); or
(b) combined total assets of $213,297.00 (including the house and car); and
(c) you will be assessed taking into account your income.
Two things to keep in mind here are:
(a) that if the partner remaining in the home later requires rest home care and applies for a subsidy then
the family home will be taken into account in assessing the value of assets and may lose the home exemption; and
(b) the criteria (especially the threshold levels) are reviewed each year on 1st July and so could change.
If you do not have a partner or your partner is already in residential care then the home is not exempt. You will only qualify for assistance by way of rest home subsidy if you have assets equal to or less than $213,297.00.
If you are applying for a subsidy and your partner is remaining in the family home as a principal place of residence then you can choose an assessment on either:
(a) total assets of $116,806.00 (excluding the home and car); or
(b) combined total assets of $213,297.00 (including the house and car); and
(c) you will be assessed taking into account your income.
Two things to keep in mind here are:
(a) that if the partner remaining in the home later requires rest home care and applies for a subsidy then
the family home will be taken into account in assessing the value of assets and may lose the home exemption; and
(b) the criteria (especially the threshold levels) are reviewed each year on 1st July and so could change.
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