Did you know gifting can impact your Age Pension?

Before you gift a significant amount, it’s important to understand how this may affect your Age Pension or other social security benefits, now or in the future.

What is gifting?

Gifting can be a viable strategy as gifts given within certain limits can not only provide you with the satisfaction of being able to help others, but also slightly increase your Age Pension entitlement. However, exceeding these limits could result in the gift continuing to be treated as your asset for a period of time, even though you no longer hold this asset.

But gifting isn’t just about giving away an amount of your savings. There are a number of other scenarios where gifting rules may apply, for example:

• Transferring shares to someone without receiving the full market value in return
• Giving up control of a company or trust which holds underlying assets
• Transferring an investment property worth $300,000 or more to another person for less than its true value (for example, for $200,000)
• Waiving a loan owed to you
• Providing money to a company or trust you don’t control, without a loan agreement showing the amount is to be repaid.

What's not included as gifting?

You're not considered to be gifting when you sell or reduce any of your existing assets to meet normal living costs, for example, paying for a holiday or funding renovations to your home.¹

You’re also able to transfer assets between yourself and your spouse without the gifting rules applying. Additionally, there may be opportunities to contribute assets to your spouse’s superannuation account and increase your Age Pension entitlements, where your spouse has not yet reached their age pension age.²

How much can you give when gifting?

While there’s no limit on how much you can gift, there are thresholds above which your Age Pension may be affected. Centrelink use two tests to determine if you are within or outside the allowable gifting limits.

Individuals and couples combined can gift up to $10,000 per financial year or up to $30,000 over a five financial year period and remain within the gifting free area. The harsher of the two rules apply.

If you gift more than the allowed limits, the excess may still be counted as your asset and used to assess your Age Pension under both the assets and income tests.³

How can gifting affect your Age Pension?

Deprivation rules are designed to limit how much you can give away or reduce your assets without affecting your Age Pension.

If you give away assets or reduce their value in excess of the gifting limits, Centrelink may still treat those assets as if you own them. This means they can be included in both the assets and income tests for up to five years from the date of the gift.

Concerned about the impact of gifting?

As gifting rules can be complex, consider speaking with a financial adviser or Centrelink before you make a gift.

Example - Gifting and deprivation

Joan is 68, and receiving the Age Pension. She wants to help her daughter buy a property. On 1 July 2026, Joan gives her daughter $50,000 from an inheritance Joan recently received from her late father.

As Joan has not gifted any amounts previously, the first $10,000 falls under the gifting free area and the remaining $40,000 will continue to be treated as Joan’s asset under the Centrelink income and asset means tests until 1 July 2030.

After this time, the remaining $40,000 will no longer be treated as Joan’s asset.

References

1. https://www.servicesaustralia.gov.au/gifting?context=22526
2. https://www.servicesaustralia.gov.au/superannuation?context=22526
3. http://​guides.dss.gov.au/​guide-social-security-law/​4/​1/​1