Chris’s father would like to gift her some money, but both are unsure if his Age Pension and her Widow’s Allowance will be affected. So we take some time to clarify the rules.
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Q. Chris
My 93-year-old father is on the Age Pension and wishes to gift me some money. I don’t know the exact amount but I’m guessing it’s around $20,000 or $30,000. He has no other assets, such as a house or large investments to speak of. I need to know if he will be penalised by Centrelink if he does this, as I will inform him not to do it, if that’s the case. I am on the Widow’s Allowance and have nothing of value, so if all goes ahead, could I be penalised for receiving the gift?
A. Your father can gift up to $10,000 a year but no more than $30,000 in a five-year period. Therefore, if he was to gift you $20,000 or $30,000 in one year, then the amount over the $10,000 would be considered a deprived asset and he would be assessed as though he still had that money. Therefore, he wouldn’t actually be penalised, as his financial situation would be more or less the same. However, he would receive no real benefit of reducing his assets, other than by the amount of $10,000.
If you receive an amount, the gift itself will not be assessed as income; however, what you do with it could affect your Widow’s Allowance payment. For example, if you were to buy an asset, such as a car, this will count towards the asset test. If you were to put the money in a bank account, it would be deemed to earn interest as a financial asset and this income will be counted under the income test.
Find out more about deeming rates.
Before accepting any money from your father, you should contact Centrelink to confirm the effect this will have on your payment.
If you have a Centrelink question, send it to newsletters@yourlifechoices.com.au and we’ll do our best to answer it, or find someone who can.
Related articles:
Centrelink Q&A: A cry for help
Gifting: how does it work?
A gift in time saves the Age Pension
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