Smart money Q&A

AboutSeniors finance guru, Richard Sheargold, answers a question about Centrelink rules on gifts.

Q. Yvonne
My 83-year-old mother lives with me and my husband in our home. She receives most of the aged pension. She has approx $90,000 in her bank account but wants to lower this amount to around $30,000. She cannot gift the $60,000 to me as it will affect her pension. What options are available to her? I am an only child and she naturally wants to leave me as much as she can at the end of the day.

A. Centrelink states that an age pensioner can give $30,000 over a rolling five-year period and no more than $10,000 each financial year.
So, your mother can give you $10,000 per financial year for three years and not breach the gifting rules.
My calculations suggest that your Mum is breaching the incomes test (as opposed to the assets test), but only by a few dollars a fortnight. All your mum needs to do is give you $10,000 now and she should then get the full age pension. She could then give a further $10,000 on 1 July (new financial year) to be absolutelycertain. Just one thing, Yvonne, your question leads me to another question: Why isn’t the money invested to earn some long term capital growth and good income? If it is in an ordinary bank account then the interest would be minimal (at best) and the fees high. Centrelink don’t care what the money is invested in, they do their own calculation regardless of what the cash is earning, this is called ‘Deeming’. By having it in the bank alone, you are not beating inflation and therefore it is being eroded away and Centrelink are penalising your Mum regardless of where it is!

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