Time to overhaul Age Pension gifting rules

The gifting rules for age pensioners are outdated, too restrictive and must change, says advocacy group National Seniors Australia (NSA).

It is urging the federal government to overhaul the LIMITS.

Currently, older Australians can ‘gift’ some money to family and friends without affecting their Age Pension payment. But to ensure the system is not exploited, there are caps in place that restrict the amount you can give.

The yearly cap sits at $10,000, or a maximum of $30,000 over five years. If that limit is exceeded, Centrelink will include the excess amount when calculating your pension (for a maximum of five years from the date of the withdrawal).

Read: Centrelink Q&A: Will higher interest affect your pension?

While $10,000 might sound like a reasonable figure, it is perhaps less so when considering that’s exactly what it was 20 years ago. Had it been indexed to inflation, that amount would be now around the $16,000 mark.

Over that 20-year period, as National Seniors points out, “housing prices have risen 8.6 per cent per annum from 2002 to 2020, and inflation has increased on average by 2.7 per cent per annum”.

Inflation has been at historically low levels during that period, but is now rising sharply, and that $10,000 is beginning to shrink rapidly in real terms.

NSA chief advocate Ian Henschke says: “Similar to the income test issue, there should be changes made to the gifting rules. Labor is now in power. They should look at the gifting rules as something that they could easily improve in the upcoming budget.”

Read: Report highlights the problems for renting pensioners

National Seniors is also campaigning for permanent change in other areas affecting pensioners, most notably to the amount of money a retiree can earn – from both employment sources and investment income sources – before their Age Pension entitlement is affected.

Mr Henschke points out: “We have 480,000 job vacancies in Australia and if you allow pensioners to work, this will assist the economy. And modelling shows that the government does not lose out by allowing retirees to work and still retain their full Age Pension. The government makes it back from the income tax they’ll collect on the wages earned.”

Mr Henschke says Australia is lagging behind other countries in the number of older people in the workforce. “Internationally, 20 per cent of people over the age of 65 work, however in Australia we are lagging behind at 14 per cent.”

Read: What assets will rule out qualifying for the Age Pension?

At present, a single person on the Age Pension cannot earn more than $190 per fortnight before their entitlement is affected. For a couple, the amount is $336. NSA is calling on the government to exempt employment income from the Age Pension income test, and has launched a petition to that effect.

The federal government pledged to make changes in this area at the recent jobs and skills summit and, from December, pensioners will receive a one-off income credit that will allow them to earn an extra $4000 this financial year without penalty.

The temporary top-up will increase the amount pensioners can earn from $7800 to $11,800 before their pension is reduced.

But Mr Henschke is seeking more permanent measures. “They need to take the handbrake off the system by making changes in the upcoming budget (on 25 October).”

Would an increase to gifting limits make a difference to you? Are the rules discouraging you from working? Why not share your experience and thoughts in the comments section below?

Andrew Gigacz
Andrew Gigaczhttps://www.patreon.com/AndrewGigacz
Andrew has developed knowledge of the retirement landscape, including retirement income and government entitlements, as well as issues affecting older Australians moving into or living in retirement. He's an accomplished writer with a passion for health and human stories.


  1. Just pay the Damm pension like they do in first world countries like NZ, everyone gets the same at 65 regardless of what they’ve saved or what they put through a poker machine or whether they are still working or not. Then get rid of half of centrelink it would be a lot cheaper for the country in the long run

    • Agree, just make the age pension universal and bring it back to 65 while at it. The pension is taxable so if you have other income the ATO will take some of the gross. This would save so much administration and angst it might pay for itself while also facilitating those still fit enough to remain in the workforce longer.

  2. It is not the gifting rules that are a big issue, but the deeming rates and the amount a person can earn. Earnings are caught by taxation, so if a person gets a full pension, but also gets some income over the threshold, it is captured by the ATO. What a simple process.

    But no, we have stupid income tests that are so onerous, it is easier not to work (although many could and would like to). I experienced first-hand what happens when you go over the threshold for one short period, and how long it takes to restore your benefits when the one-off income is no longer there.

    Canada and NZ get it right. Seems we have too many bureaucrats to do likewise.

  3. I just wonder how much money would be saved by simplifying the pension system .
    Instead of the gestapo Nazi type monitoring of pensions would it not be far easier to just give it to those who are eligible ?
    One pension for all, just get rid of the half baked and flawed laws and rules and we can get rid of half of Centrelink and all the private contractors living like leeches off the government .

    The government should put back some fairness and correct thinking back into its system.
    If we are constantly being told what the living wage is then why are pensioners penalised for not even achieving a minimum wage?
    On the same hand the government hands out benefits to couples with children like confetti.
    With combined incomes often exceeding $200,000 a year they still qualify for benefits, and yet pensioners are beaten down with a big stick if they can get anywhere near $36,000 dollars.
    It is ridiculous and unfair and a down right disgrace

    It does not matter who you voted for, this is beyond politics , if they keep telling you what you need to exist then they should pay what you need to exist.
    You set the living wage and you pay the pension to those whose incomes is below it. When income exceeds the living wage then you start removing benefits it is that simple and easy , I feel like throwing some one off a cliff when I start talking about this.

    A living wage is calculated as 60% of the Median Full-Time Adult Wage in Australia. The median is a measure of the midpoint. If you lined up every full-time adult wage in Australia, the one in the very middle would be about $42 per hour. Just as many full-time adult workers earn less as those that earn more than $42 per hour. Many earn a great deal more. The Australian Living Wage is 60% of this median $42 per hour.

    In Australia, a Living Wage is $25 per hour.

- Our Partners -


- Advertisment -
- Advertisment -