This is a very common and important question because there are limits to how much you can give away without an impact on your payments. The limits are part of the gifting rules.
Gifting rules apply not only to people who are already receiving the Age Pension, but also to those who intend to apply within the next 5 years. This is to discourage people from disposing of assets in order to qualify for the pension.
Furthermore, the rules are not only for those giving money to children. Gifting is where you give away assets, or transfer them for less than their market value. Below are a few common examples that Centrelink classifies as a gift:
- You own a rental property worth $380,000 and sell it to a friend or family member for only $200,000
- You buy a car for your child as a present
- You have 10% of your wages donated to your church
- You forgive an outstanding loan
- You repay your child’s loan because you guaranteed it
- You transfer your shares or units in a trust or company and don’t get full market value for them
Gifting isn’t selling or reducing your assets to meet normal costs such as a fridge, a holiday or home improvements paying for services, such as painting.
What are the limits?
The same limits apply for singles and couples. The most you can gift without it affecting your Pension payments is:
- $10,000 in 1 financial year, or
- $30,000 over 5 financial years – this can’t include more than $10,000 in any year
Amounts you gift in excess of these limits will:
- count in your assets test, plus
- have deemed interest applied and this will be included in your income test for 5 years after the gift date.
If you are thinking about applying for your Pension and are unsure how the gifting rules will be applied to your financial situation, why not speak to one of our Age Pension Specialists? Our Age Pension service has been designed to take away the stress and confusion that senior Australians commonly experience when dealing with Centrelink.
I share ownership of the family home with my ex-husband. He currently lives in it and pays the rates etc but no rent or income to me. Basically my name is on the deed but it is not an asset that gives me any income or profit.
I have been told that I can’t get a pension as I own this share of a house. What are my options? I am 68 years old and recently lost my job (1 month ago) & have no income at all.
Hi Robyn
I am not too sure where you got your advice from regarding your ineligible for the Age Pension due to owning a home. Just so you know the home that you own and live in is not included as part of Centrelink’s Assets test calculation for the age Pension.
Is the amount mentioned per child, or total?
e.g. Can I gift $10.000 each to 2 children, or would I need to wait for the second half of the year to gift the second child??
Thanks 🙂
Hi Carolyn
You can gift $10k per year to a maximum of $30k in a 5 year period without impacting your Age Pension entitlement. It is not about who you gift the money to, rather how much you are personally giving away. I hope this makes sense. If not, then please give us a call on 1300 527 727 and one of Age Pension Specialists can chat with you about gifting rules. We are back in the Office on Tues 29/1 after the Australia Day long weekend.
I am thinking of making a interest free loan to my children which is well in excess of the gifting limits. I won’t be applying for the pension until 5 years after the gift date, but it will take them 10 years to pay me back. So during that 5 year period – until they have repaid me – does the money they pay me count as income?
Hi Kim, thanks for reaching out for assistance. It’s great that you are weighing up the pros and cons of gifting vs lending. To answer your question Centrelink will not consider the repayments as income, they will instead consider whatever the amount remaining on the loan balance as an asset until it has been repaid in full. Given the way you have explained your situation I think it would be worth having a confidential consultation about your options. I will send you an email separate to this comment about how we might be able to help.
I own a house which i purchased for my mental health brother to live in for the rest of his life. He suffers badly with paranoria so as he has no neighbours he is finally settled and happy. He pays rent and I pay all repairs. water/land rates and insurances. To get the pension as i am almost 69 yrs. And now not working would I need to transfer the house into my brothers name but let Centrelink know what I receive. Or should I speak to them first.
I borrowed $20k from a friend to help in an estate legal matter, once this is settled, I hope to inherit around $200k and pay my ftiend back. Will these impact on my single pension?
Hi Ann. Depending what you do with it an inheritance will affect your pension. If you invest it or put it in the bank Centrelink will apply the deeming rules to that money. On the other hand if you spend money on a holiday, use it to pay off your home mortgage or renovate your home then that money won’t affect your entitlements. You can read more about it here.
What about receiving a gift instead? How are gifts of money considered for the recipient not the giver.
Hi Dagmar. Gifts of money will be treated as assets if they are in your bank account or invested. Centrelink will then apply the deeming rules to them. If on the other hand they are spent on a holiday or to renovate your home or pay off your home mortgage they won’t impact your entitlements.
I’ve paid out $40,000 for my daughters wedding over the past 6 months.I’m 68 years old and applying for the age pension in March 2022 when i retire. Will this affect my assets.
We will be giving each of our children $5k next year, $10k in total. We did the same two years ago. We have gifted $20k in total.
We are therefore within the Gifting rules.
Do we have to disclose these transactions to Centrelink?
Our daughter has been approved to purchase a house using the Government shared purchase scheme we have offered to loan her the money to pay the stamp duty and repay the loan if/when she sells the property will this be classed as a loan or gift
Hi
I have a trust, the house I live in is in the trust, it is worth about 1.3m
The benifiecies of the trust are my children
Will I be eligible for a pension
My husband and I own our own home, but he also has 50% ownership of a home with his ex-wife. We pay the Council rates on that home and we do not receive any rent from his ex-wife. We were hoping to apply for the pension in the next year or so. How does this affect our application? Does 50% of the value of that home apply to our assets?
thanks
I am thinking of giving each of my 3 children $5000. My husband will be 65 this year (1957) and will be 64 (1958). I read that the gifting amounts is $30,000 over 5 years. How will this affect our retirement in a few years? That is, how retrespective is Centrelink’s rules? We may not be eligible for pension in the beginning, but still wish to make informed financial decisions.
Hi Karen, thanks for commenting! In the scenario you proposed the impact would be very minimal potentially nothing. Gifting is assessed for 5 years from the date the gift is made, therefore Centrelink want to know about any gifts made in the 5 years prior to applying. As per the article, you are allowed to gift $10K per year so if you gift the money now then by the time your husband is age eligible to apply, there will be no impact. You will still need to declare the gifts to Centrelink so they can track the $15K gifted against the $30K in 5 years rule but your husband’s Age pension will not be impacted by the gifting.
My mother receives a fortnightly Super payment from NSW State Super plus a part pension. We are flying as a family to the US for a family wedding. Can she purchase all the plane tickets from her savings? Will the amount that is not her plane ticket be regarded as a “gift”? I can see that she is allowed to spend her savings on a holiday – although it is not clear if she pays for others on that holiday is that still considered a holiday or a gift? Thank you!
Hi Laura, thanks for you comment! Technically speaking yes any money your mother spends not on her own expenses could be counted as a gift however as with all things related to Centrelink there are some ifs, buts and maybes. For example, if your mother updated Centrelink on the balance of her assets as $X today and then after paying for everyone’s flights/accommodation goes back to Centrelink a month later and says “my balance has dropped by $Y due to my holiday booking” Centrelink may question the large reduction within a short period of time. If however your mother hasn’t updated Centrelink on her bank balance for a year and updates them post-purchase, Centrelink would look at how much time has passed and be far less concerned about the significant change in balance.
Generally speaking I would not be concerned about your Mum paying for everyone’s holiday, just be sure that if she does she uses her card to make the purchases vs transferring money to you or others. You will have a much harder time trying to explain cash transfers as covering costs and more likely to have it counted as gifting. Lastly bear in mind that Mum is allowed to gift up to $10,000 in one year (up to a max of $30,000 in 5 years) with no penalty to her pension so depending on the costs she might be comfortably under the limit anyway.
I am wanting to gift my daughter $22k to purchase a car. There will be no other gifting within 5 years. Am I eligible to gift this, will it affect my age pension?
Hi Julia, thanks for your question on gifting! We’ve actually covered this in a previous article you will find HERE.
Selling an investment property worth 500k and donating the money to my daughter. Can I get a pension if applying after 5 years from donation? What happens if I apply after 3 years from donation?
Hi Daniel, it might be worthwhile having a play around on our free Age Pension Eligibility Calculator in relation to when benefits might be available for you however, if you would like to understand more about the gifting provisions and how these might apply to your Age Pension eligibility now, vs 3 or 5 years time, I would be happy to go through this with you in one of our General Advice consultations. You can book one of these here. Thanks, Megan
My parents are on a full pension so therefore would not be eligible for any further pmts from Centrelink regardless of future need. In that light are they still restricted in what they can gift. They are keen to see family benefit now from what they have saved rather than leave it behind.
For example: how would it affect them if they were to gift 10k to each of their 3 grandchildren, or 10K to each of their 5 great grandchildren…into a trust fund scenario
Hi Jill, well done seeking clarity to help your parents out! If they are already receiving the full Age Pension then they can gift however much they like to whomever they like. The penalty for ‘over-gifting’ is that the excess amount is still assessed as an asset even though you do not have it anymore. In this case that is of no consequence because they are already under the minimum threshold.
I am going to stay with my daughter in Perth until the end of life. I have a property in Sydney which I am letting my daughter in Perth and her children use at no rent. does this affect my age pension
Hi Karl, thank you for seeking our assistance! Depending on your situation it is possible your property in Sydney will be assessed as an asset/investment property and therefore could reduce the amount of Age Pension you are entitled to. To discuss the specifics we’d need to have a confidential consultation with you to go through all the ifs, buts and maybes. CLICK HERE to make a booking.
I am planning to sell my investment property prior to my retirement and gifting the proceeds to my kids, otherwise the total assets would exceed the maximum asset limit for pension eligibility. Do I have to wait 5 years to forgo this asset and to be eligible for part government pension?
Hi Sudath, great question. Gifting is counted towards the Assets Test for a 5 year period. It is possible to qualify for part Age Pension even if you have Gifted some money, provided your assets are within the Assets Test threshold. This varies for homeowners and non-homeowners, and also singles and couples.
We offer tailored advice consultations where the figures relating to your individual circumstances can be looked at for you. These are available here if you would like a booking to talk it through with us. Only the General Consultation and Strategy Consultation bookings offer advice. The Entitlements Consultation is factual information only.
I have a child on income support. They often need financial assistance for rent, food, etc. Is this assistance classified as a gift under Centrelink rules? Thank you.
Hi Jennifer, thank you for reaching out! Technically yes, any money given away to others counts as gifting however there can are ways you can be smart about it. For example, you could buy groceries or Bpay an electricity bill rather then simply transferring money.
Thank you for the information sheet, but I still need to answer my question. The sheet relates to significant transfers like cars and trust funds. My question refers to money that I am accustomed to giving to my children in need long before I became a pensioner.
Thank you.
Hi Jennifer, thanks for seeking further clarity! Centrelink only count amounts you have gifted for the current financial year and the 4 previous ones. Therefore depending on when you gifted the money vs when you when you began receiving the Age Pension, there may not be any consequence.