Many people like to help family members financially. While gifting can be a meaningful way to support loved ones, it can also have unintended consequences for current or future Age Pension entitlements. Centrelink has strict rules on how much you can give away without affecting your payments, and exceeding those limits can reduce your entitlement for up to five years.
This article explains how the rules work, what the gifting ‘free areas’ are, and uses an example to show how gifts can stack up over time.
The gifting rules refresher
Centrelink applies deprivation provisions when you give away assets or income for less than market value or don’t receive any consideration in return. If how much you gift is more than the allowed free amount, the excess is treated as if you still had it. This means it continues to count for your assets test, and deeming rules apply, so that income is also assessed on the excess. The key point is that even though you no longer have the money, Centrelink will still count it as a deprived asset for five years from the date of the gift.
How much can you gift?
The free areas are the same for singles and couples:
- Up to ten thousand dollars in one financial year.
- A maximum of $30,000 over a rolling five-year period, with no more than $10,000 in any single year.
If you gift more than this, the excess is treated as a deprived asset. Both the assets test and the income test can then reduce your Age Pension.
How to calculate deprived assets under the 5-year rule
The calculation works in two layers: first the annual $10,000 cap, then the five-year $30,000 cap. Here’s the process in plain language:
- Add up all gifts in the last five years. This includes the current financial year plus the four before it.
- Check what’s already counted as excess. This means looking at any parts of previous gifts that went over the $10,000 annual cap, plus any amounts already treated as excess under the $30,000 five-year rule.
- Work out what’s left. Take the five-year total (from step 1) and subtract what’s already been assessed as excess (from step 2). If what’s left is more than $30,000, then the amount over $30,000 becomes excess under the five-year rule.
This layered approach explains why not every dollar gifted ends up being deprived. Only the amounts that push you over the annual and five-year caps are counted.
Stacking gifts over five years
To see how this works, let’s look at David. He is 70 and on the Age Pension. Over several years he decides to help his grandchildren with education costs.
| Date | Gift made | Total in five-year period | Excess counted as deprived asset |
| Mar 2021 | $7,500 | $7,500 | $0 |
| Jul 2022 | $14,000 (? $4,000 over annual $10,000 limit) | $21,500 | $4,000 (until Jul 2027) |
| Aug 2023 | $6,500 | $28,000 | $0 |
| Dec 2024 | $12,000 (? $2,000* over annual $10,000 limit) | $40,000Five-year total $40,000 – $4,000 (prior excess from Jul 2022) = $36,000(?$6,000 over five-year limit) | $6,000 (until Dec 2029) |
*Note: There is $2,000 over the annual limit in December 2024. However the five year limit has also been exceeded. To avoid double-counting, only the additional $6,000 above the five year $30,000 cap becomes a new deprived asset.
How it adds up:
In total, David gifted $40,000 over five years, but only $10,000 counts as deprived assets. These amounts continue to be treated as if he still owned them for both the assets test and the income test. Even though the money is gone, Centrelink will still assess it under both the income and asset tests, which could possibly reduce his Age Pension entitlement for the relevant period.
Why this matters
Many people are caught off guard by the gifting rules. It’s common to assume that once money is gone, it no longer counts. But under Centrelink’s framework, exceeding the free areas means your Age Pension is reduced as if you had never given the money away for five years after. The intention is to prevent people from deliberately giving away assets just to qualify for a higher Age Pension – but the rules apply even when the motivation is simply helping family or supporting loved ones.
That’s why it’s worth keeping these key points in mind when you’re thinking about gifting:
Key takeaways
- Stay within the limits: You can gift up to $10,000 a year and $30,000 over five years without affecting your payments.
- Track gifts carefully: Several smaller gifts over time can still push you over the five-year cap.
- Understand the rolling 5 year period: Each gift is recorded and continues to count towards the asset test for five years from the date it was made. After that five-year period, it stops affecting your Age Pension.
- Both tests apply: Excess gifts affect both the assets and income tests.
Thinking through these details early can save you from surprises later and help ensure your gifting strategy is in line with your own retirement income needs.
Making decisions with confidence
For a deeper understanding of how these rules might affect your personal situation, booking a Retirement Essentials Consultation can help. Whether it’s an Entitlements Consultation to understand any immediate impacts on your Age Pension eligibility, or a Retirement Advice Consultation for the bigger picture, Retirement Essentials advisers can review your gifting plans, explain the impact on your Age Pension, and help you make informed decisions that enable you to protect your retirement income while supporting your family.
What about you?
Is there any one unexpected aspect of Centrelink’s gifting rules that you’ve encountered or learned about?
How do you balance your desire to help family financially with the need to protect your own retirement security?
