Understanding the Centrelink Gifting Limits

Ok, so maybe you want to help out a family member with wedding costs. Maybe you promised the kids you’d help with the grandkids school fees. Or, maybe you lent them money to buy a house and have told them not to worry about paying it back.

All of these are gifts – and all can impact your entitlements to a  Centrelink Age Pension.

So what are the limits?

A  single  person  or  couple  can only “gift” assets  up  to  $10,000  per  financial  year  (or  $30,000  over  a  five-year  period)  with  this  having  no  impact  on  their  entitlement  to  social  security  payments.

Centrelink will assess you using both rules individually. This  means  that  they  will  look  at:

Rule 1  –  Does  the  gift  exceed  $10,000  in  the  current  year?

OR

Rule  2  –  Do  gifts  in  the  previous  five  years  exceed  $30,000?

An Example

What happens if you go over the limits?

If  you  go  over  this  amount,  then Centrelink will call these “excess” gifts  a  “deprived  asset”.  This means they  will  still  be  included as an asset and also  subject  to  ‘deeming’ and  included  in  the  income  test.

When  you apply  for  an Age Pension, Centrelink  will  also  look  back  to  see  whether  you  have  gifted  any  assets  in  the  last  5  years.

Remember,  it  doesn’t  meant  that  you  can’t  give  your  money  away.  Just  be  careful  that  in  gifting  it  doesn’t  leave  you  in  a  situation  where  you  lose  your  Age Pension  and  don’t  have  the  assets  (or  their  income)  and  as  a  result  you’re  left  in  a  worse  financial  situation  yourself.