Centrelink Q&A: How does gifting affect the Age Pension?

Font Size:

Garry and his wife have accounts for the grandkids, but now it’s time to transfer the money.

•••

Q. Garry
My wife and I are both 71 years old and we receive a part Age Pension, which is currently assessed under the assets test. We each receive approximately $194 per fortnight.

We have bank accounts for our four grandchildren in which we place approximately $40 once a month, and my wife is nominated as trustee. We have always accounted for each of the account balances as assets in my wife’s name to Centrelink for Age Pension calculation purposes. One of the grandchildren turns 21 in November this year and we intend to transfer the balance of his account into his name for $16,000. How will this be treated for our future Age Pension calculation purposes? Will it be regarded as a gift over $10,000 in this financial year (2019/2020) and how will the excess be treated?

A. Any sum of money that you give away would be subject to gifting in the financial year that you give the money away.

Gifting allows you to give away $10,000 each year, and up to a maximum of $30,000 in a five-year period. If you gift more than these amounts, it will be considered a deprived asset and you will continue to be assessed on this amount for the five years.

So, when your first grandson turns 21 and you gift him $16,000, your combined assets will only be reduced by $10,000 for Centrelink purposes. This means that you may still see an increase in your pension payments, but not by as much, because your assets are decreasing in reality.

That $6000 will still be included as an asset for the next five years. Depending on how the birthdays of your grandchildren are staggered, it sounds like you will be gifting around $64,000 in total. The $30,000 gifting limit means that if you pay out the total in the same five-year period, you will still be assessed as holding that extra $34,000 in assets, even though you have given that money away.

If you enjoy our content, don’t keep it to yourself. Share our free eNews with your friends and encourage them to sign up.

Disclaimer: All content on YourLifeChoices website is of a general nature and has been prepared without taking into account your objectives, financial situation or needs. It has been prepared with due care but no guarantees are provided for the ongoing accuracy or relevance. Before making a decision based on this information, you should consider its appropriateness in regard to your own circumstances. You should seek professional advice from a financial planner, lawyer or tax agent in relation to any aspects that affect your financial and legal circumstances.

RELATED LINKS

Centrelink Q&A: Are you using the right assets test?

Brian is confused as to whether to apply the single or couple assets test in his situation.

Include family home in assets test: economist

Including family home in assets test ‘the right thing to do', says economist

Centrelink Q&A: Can I use this trick to increase my pension?

Owen thinks he has found a way to increase his pension, but will it work?

Written by Ben



SPONSORED LINKS

Sign-up to the YourLifeChoices Enewsletter

continue reading

COVID-19

Australian doctors call for calm over coronavirus vaccine blood clots

Doctors have demanded the media be much more cautious in the way blood clot cases are reported in people who have...

Technology News

Research shows people trust computers more than humans

Computers continue to defy expectations about their capabilities, and it is happening at a much faster rate than most people...

Relationships

How to handle conversations with a relative expressing racist views

The Duke and Duchess of Sussex's interview with Oprah Winfrey highlighted an issue that many people will relate to -...

Lifestyle

Friday reflection: Why is packaging so difficult?

Is it just me or do others over 50 struggle with opening things? Why is packaging so difficult? It seems...

Finance News

2021's top 100 most reputable brands

Reputation is everything - in business and in life. It's hard won, but easily lost. It can cost politicians their...

Health news

Best treatment for bedtime performance anxiety

Trying to sleep produces a kind of performance anxiety, and the more you worry about it, the worse your sleep...

Finance

Five mistakes to avoid when investing in property

Investing in property can be a complex and overwhelming journey, particularly for first-time investors. If you are thinking about investing...

Competitions

Score a double pass to see Supernova

In two minutes, I was brought to tears. That's about how long the trailer for Supernova lasts. It's the new...

News

Perfect Sticky Toffee Pudding

This is perhaps my favourite cake of all time. It’s moist and slightly chewy, and it tastes like holidays in...

LOADING MORE ARTICLE...