Centrelink Gifting Rules Explained

One of the most common questions we are asked is “how much will Centrelink allow me to gift”.  The simple answer, as much as you like.  Whilst you can gift or transfer assets to any value, it will impact your pension if you choose to exceed the allowable gifting amount.  The allowable gifting amount is $10,000 per financial year to a total of $30,000 in any five consecutive financial years.  This amount applies as a total gift regardless if you are a single person or couple.

A gift can include;

• gifting money directly.
• selling an asset to someone for less than market value, for example giving a car to your daughter from $1,000.
• making a loan then forgiving it.
• paying for anything on behalf of someone.
• putting money into a family trust you do not control.
• making excessive donations to an institution.

If you gift more than the allowable amount the excess will be assessed as a ‘deprived asset’ for five years from the date of gift and will be deemed for income test purposes.  As a practical example, if John gifted $10,000 in 4 consecutive years the final payment is in excess of the limits and would therefore be classed as a deprived asset for 5 years.  This essentially means that John is deemed as still having the final gift of $10,000 for the following 5 years, despite not being in his possession.

The allowable maximum gift of $10,000 per financial year removes the ability to gift significant assets to increase pension entitlements.

It is also important to note that any excess gifts made before you are entitled to a Centrelink pension or allowance will also be assessable if made within five years prior to receiving entitlement.  This prevents people from reducing their assets in anticipation of applying for a pension.

There can be a whole range of possible scenarios, some more complex, so if you are having trouble figuring it out, contact one of our advisers for a quick explanation.