Social
Development can reduce rest home subsidies by treating as residents’ income that
income lost in respect of assets given away, but not where the value of assets given
away is below an annual threshold of $27,000, the High Court decided in a test
case.
Stephen Broadbent took
up his mother’s cause after she was levied fortnightly residential contributions
of some $1210 on the basis she had deprived herself of income by the mere fact
of gifting assets to two family trusts. She
sold assets to the trusts, taking a debt back for their value. This debt back was reduced by $328,750
following a long-term gifting programme of up to $27,000 each twelve months. The High Court was told the trusts’ assets
now greatly exceed in value the amount gifted, due in large part to the property
boom and the trusts’ own investment activities.
The court was told of
growing political concerns over the practice of wealthy individuals depriving
themselves of valuable assets, and associated income, to qualify for rest home
subsidies. Current rules impose both an
asset threshold and an income threshold.
Mrs Broadbent was below the asset threshold. She was above the income
threshold following a Social Development assessment of $45,398 in annual
income, based on income received plus “deprived income”. It
argued all assets gifted at any time (with an exception for gifts in any one
year totalling $6000) should be treated as notionally available to earn income
of any applicant for a rest home subsidy.
Income on these assets would be treated as Mrs Broadbent’s, even though
she no longer owned the assets or received the income.
Justice Katz ruled
Social Security Act regulations allow deprived income to be imputed from assets
gifted in excess of $27,000 in any twelve-month period, but not to gifts below
that annual threshold. The $328,750
gifted was not to be treated as a notional asset for determining levels of
deprived income for Mrs Broadbent.
Broadbent
v. Social Development – High Court (30.06.17)
17.076