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