In New Zealand, any amount you have gifted during your lifetime may affect whether you or your partner are eligible for the Residential Care Subsidy, which helps cover the cost of long-term residential care in hospitals or rest homes.
Gifting Rules for the Residential Care Subsidy
When determining what your assets are for subsidy eligibility, the current limits are:
- Gifts made in the last 5 years: You can gift up to $8,000 per year without it being counted as an asset;
- Gifts made more than 5 years ago: The allowable gifting limit is to $27,000 per year (for an individual or a couple).
- Gifting in recognition of care: If someone has provided you with at least 12 months of continuous care, you may gift them up to $40,000, provided certain conditions are met;
- Excess gifting: Any gifting above these limits is considered excess gifting and will be counted towards your total assets, potentially affecting your eligibility to the subsidy.
Residential Care Subsidy Eligibility
To qualify for the subsidy, you must:
- Be 65 or older, or 50-64 and single with no dependent children.
- Be assessed as needing long-term residential care.
- Have assets below the threshold, which varies depending on whether you include your house and car.
The current Residential Care Subsidy Thresholds as at June 2025 are:
- For individuals aged 65 or older: Your total assets must be $284,636 or less.
- For couples where one partner is in care and the other is not:
- You can choose to exclude the value of your house and car, in which case the asset limit is $155,873 or less.
- If you include your house and car, the asset limit remains $284,636 or less.
These thresholds will determine whether you qualify for financial assistance with long-term residential care costs.
If gifting exceeds the threshold, the Ministry of Social Development (MSD) may include the excess amount in your asset assessment, potentially making you ineligible for the subsidy. This means you may need to cover the full cost of residential care yourself.
Gifting
If you gift more than $27,000 in a given year (or $13,500 each for a couple)—or more than the allowable amount within a 12 month period—it could be classified as your available asset, potentially disqualifying you from subsidies. These constraints mean that timing matters critically; asset transfers must be arranged well in advance of any subsidy application, and regulators can reverse transfers made too close to a critical event. Such statutory limits are an example of how regulation sets clear boundaries for what is and isn’t acceptable in asset protection planning.
Timing of Asset Transfers
One of the most critical factors is when you arrange your asset protection measures. Many people wait until they’re too close to needing government support (ie the Residential Care Subsidy) to transfer assets. For instance, gifting or restructuring assets within five years of applying for care can lead to those transfers being “reversed” or added back to your asset pool for means testing. Essentially, if assets are shifted too close to the trigger event, they might be deemed a deliberate attempt to undermine eligibility criteria.
Example: John, who is in his early seventies, decides to transfer his savings and property into a trust just two years before applying for Residential Care Subsidy. Because New Zealand’s rules typically require asset transfers and gifting to be completed at least five years prior to the subsidy application (to avoid a lookback where the assets are reassessed), the assets are counted in his eligibility test, disqualifying him from the subsidy.
Exceeding Statutory Gifting Limits
In New Zealand, there are specific limits on how much you can gift without it affecting your asset assessment—for example, the $27,000 annual limit (and lower thresholds for recent transfers) in the context of care subsidies. Exceeding these limits can result in the excess amount being included back in your asset calculation, inadvertently jeopardising your eligibility for benefits. This is a common pitfall when individuals miscalculate or are unaware of these thresholds.
Example: Mary wants to help her children by giving them a portion of her savings. She gifts an amount of $35,000 in a single year, above the allowable limit of $27,000 (and even lower if the gifting occurred within the past five years). When authorities review her assets for Residential Care Subsidy eligibility, the excess $8,000 isn’t ignored—it’s added back into her asset pool. This misstep causes her assets for asset testing purposes to be higher than they are, jeopardising her subsidy prospects.
