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Changes to the aged care assets test - Gifted assets and Income Streams

Information about the Gifted assets and Income Streams - changes to the aged care assets test.

The rules under the aged care assets test have changed for people who are entering permanent residential aged care for the first time, or moving to a new home.

The changes affect two areas: gifts of assets, and money invested in "income stream" products. An income stream is a regular series of payments generated by money invested by an individual to provide a regular income.

The changes will mean that the rules for gifted assets and income streams will be more consistent with those that apply under the pension assets test.

Gifted assets

The rules under the aged care assets test for gifted assets have been aligned with the rules for the pension assets test.

From 1 January 2007, any amount given away over $10,000 in a single financial year, or $30,000 in a five-financial year period, will be included in the aged care assets assessment.

Note that gifts made from 10 May 2006 will be assessable.

Before the new arrangements were introduced, gifted assets were excluded when calculating the value of assets under the aged care assets assessment.

People who enter permanent residential aged care, or move to another aged care home and who have an aged care assets assessment, will be affected.

Income streams

Currently, investments which do not allow the holder to draw on the capital component (the principal amount) are exempt from the aged care assets test. These include complying income streams (i.e. income-producing investments which comply with certain requirements of the Social Security Act 1991 and the Veterans' Entitlements Act 1986).

The full amount of the purchase price for any "complying income stream" purchased on or after 20 September 2007 will be included in the assets assessment.

Complying income streams purchased before 20 September 2007 will continue to be fully exempt under the aged care assets test.

People who enter permanent residential aged care, or move to another aged care home, from 20 September 2007, and who have an aged care assets assessment, will be affected by this change.
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