Centrelink assessment of gifts

Anne would like to know if a gift of $10,000 will affect the Age Pension of the recipient and whether there is a limit to how much you can receive.  

Q. Anne
If $10,000 was given to an age pensioner as a gift from family, would this be penalised by Centrelink? Also could a husband and wife both be given a cash gift or only one?

A. No one-off gift will be assessed by Centrelink as income, regardless of the amount but it must be reasonably predicted that it will not be repeated. For example, if you were to receive a sum of money every year or two, then in all likelihood, this would not be considered a gift and as such would be subject to the income test.

Any gift given must be declared to Centrelink by the person in receipt and by the person gifting if they are also in receipt of a benefit payment. Both members of a couple can receive a monetary gift, but it will need to be declared.

Whilst being able to gift a sum of money may be a very kind thing to do, the person receiving, if they are on an Age Pension or other assessable payment, needs to be very clear that what they do with the money may affect their payment.

Simply holding on to the money and using it for every day expenses, your home, pay it into your mortgage or pay off other debt, or purchase medical equipment is fine.

If you use the gifted money to purchase a financial asset such as shares or place it in an interest-bearing account, then a notional rate of income will be determined by applying the associated deeming rate. This could mean that if you exceed the income threshold for a full Age Pension, then your payment will be reduced by 50 cents for every dollar over this amount.

For those under the Age Pension age, the money can be deposited into your superannuation fund without assessment.

Should the money be used to purchase a non-financial asset, such as a car, boat artwork etc., then the value of these assets will be assessed under the asset test. Currently, your payment will be reduced by $1.50 for every $1000 over the threshold that applies to your situation, but this taper rate will increase to $3 for every $1000 on 1 January 2017.

And if you decide to do someone else a good turn by gifting a portion of your lump sum, then you should note that Centrelink gifting rules will apply. Under these rules, you can only gift $10,000 each financial year but no more than $30,000 over a period of five years. If you exceed these limits, then under Centrelink’s gifting rules, you will be deemed to have deprived yourself of assets. Any amount gifted above these limits will continue to be assessed for the five-year period and could result in your pension payment being reduced.

If you’re unsure about how such a gift will affect your Age Pension, you should discuss your individual circumstances with Human Services by calling 13 2300. You can find out more at HumanServices.gov.au

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Written by Debbie McTaggart