gifting rules to your advantage

One of the most common questions the team at Muirfields gets asked is “How much can Centrelink allow me to gift?”

The simple answer is, as much as you like. While you can gift or transfer assets of any value, Centrelink only allows you to reduce your assessable assets by $10,000 per annum and a total of $30,000 over any five consecutive years. Anything in excess of these limits is classified as a deprived asset for five years, meaning it remains listed in your name for means testing purposes.

It’s important to note that gifting above the allowable thresholds will not negatively impact your Centrelink eligibility or payment. Rather, these rules prevent you from gifting significant assets to increase pension entitlements.

The gifting threshold is the same for both single individuals and couples; couples do not receive a per-person threshold.

For clarity, a gift can include:

Gifting money directly

Selling an asset to someone for less than its market value – for example, giving a new car to your daughter for a nominal $1,000

Paying for something on behalf of someone.

Putting money into a family trust you do not control, or

Making excessive donations to an institution

Since Centrelink only considers gifts made in the past five years, some may choose to gift money in preparation for reaching Age Pension age.

Consider a common situation where an elderly parent passes away, leaving their adult children a significant inheritance. These adult children might be well-established and prefer to see their own children receive some of the money as a helping hand.

In this instance, forwarding the inheritance to their own children would trigger the gifting rules. To avoid such a situation, the elderly parent could have an open and honest family discussion and potentially amend their will to leave assets directly to their grandchildren.

In both cases, with careful, long-term planning, gifting can be an effective strategy to improve your future eligibility for a Centrelink entitlement.

If you would like to understand more about gifting, Centrelink or general retirement planning, Muirfields welcome you to join them for a complimentary seminar at the Kurrambee Community Centre on October 24. Phone their office on 5224 2700 to book a seat.