How Centrelink treats Gifting.1

brief case overflowing with cash ready for family giftingIn order to prevent you from simply giving away your assets to qualify for age pension and other social security benefits, Centrelink and the Department of Veteran Affairs apply gifting rules that impact income support recipients.

These rules can be summarised as follows:

  • Two tests apply in respect of assets gifted:
    • a maximum of $10,000 in gifts is allowed in a single financial year (for both singles and couples combined), and
    • a maximum of $30,000 in gifts is allowed over a five year rolling period (singles or couples combined).
  • Gifts outside this limit will be class as ‘deprived assets’.
  • The deprived assets will count under the assets test for five years from the date of gift and will be subject to deeming under the income test for the same period.

From a practical sense, the rules applied by Centrelink and DVA will involve two tests. Firstly, they will look at whether the gift is within the $10,000 per financial year that is allowable. Secondly, they will also test whether the $30,000 limit over a five year rolling period is satisfied. The combination of these tests will determine whether the client has any deprived assets for a period of 5 years.

The $30,000 limit over a 5-year rolling period is also extended to include the 5-year pre-pension period. That is, the 5 years in the lead up to a client first being entitled to a Social Security pension or benefit.

For the consequences of excessive gifting activity, refer to our article on Deeming and consider taking appropriate advice from an experienced adviser in this field.

1 Reviewed and confirmed current as at January 2019.

We acknowledge the resources of Securitor Financial Group Limited in drafting the majority of the detail in the above article: it was extracted from the Support Information to advice document templates provided by them.