Example of using Reserve Bank interest rate
Client qualified for Residential Care Subsidy on 16 November 2019 and is assessed to pay a personal contribution of $69.24 per week.
MSD must use the current 6-month term deposit rate set out by the Reserve Bank Retail interest rates on lending and deposits (B3) when assessing term investments.
Income assessment example
Assessment of assets | Amount of asset | Interest rate | Assessment of income |
Bank account | $5,000 | Nil | Nil |
Term investment | $220,000 | 2.65% (6-month term deposit rate as at Nov 2019) | $5,830 |
Total | $225,000 | $5,830 per annum | |
Less tax (RWT at flat rate 21%) | $1,224.30 | ||
Less income from assets exemption (as at 1 July 2019) | $1,005.00 | ||
Total | $3,600.70 | ||
Total personal contribution | $69.24 per week |
Client qualified for Residential Care Subsidy on 16 November 2019 and is assessed to pay a personal contribution of $69.24 per week.
On 2 April 2024 the client applied for an 'Income Only Review' because their income had changed.
The client's Term Investment matured on 2 April 2024, and the client purchased a pre-paid funeral for $10,000 and gifted $6,000. The client also loaned their child $200,000 at nil interest.
The balance of the investment was credited into their bank account.
Deprived income
Assessment of assets | Amount of asset | Interest rate | Assessment of deprived income |
Bank account | $10,000 | Nil | Nil |
Loan to adult child | $200,000 | 6.03% (6-month term deposit rate as at April 2024) | $12,060 |
Sub total | $210,000 | $12,060 per annum | |
Less tax (RWT at flat rate 21%) | $2,205 | ||
Less income from assets exemption (as at 1 July 2023) | $1,188 | ||
Total | $8,667 | ||
Total personal contribution | $166.67 per week |
Client's personal contribution has been reviewed and included at $166.67 per week from 2 April 2024.
Legislation
- Deprivation of income or property: inclusion in review of means assessment section 40 Residential Care and Disability Support Services Act 2018
- Deprivation of property and income regulation 12 Residential Care and Disability Support Services Regulations 2018
- income-from-assets exemption (definition) clause 5 schedule 2, Residential Care and Disability Support Services Act 2018
- exempt assets (definition) clause 4 schedule 2, Residential Care and Disability Support Services Act 2018
