If it’s crossed your mind to look at ways to reduce the value of your total assets to be eligible to receive an age pension benefit, you should be very careful. There are strict rules governing what you can give away and when.
“Gifting” is a term used by Centrelink when you or your partner, make a gift or dispose of assets for less than the market value. This is designed to prevent pensioners disposing of assets in order to meet the asset test requirements.
The rules do allow for you to make gifts within certain limits without it affecting your benefit entitlements. The gifting allowance for a single person or a couple is:
up to $10,000 in each financial year (1 June to 30 July), but
the gifts must not exceed $30,000 in any five-year period.
Gifting amounts above these limits is considered to be “deprivation” of assets. Amounts that invoke the deprivation rule will be treated as your assets under the assets test for a period of five years.
Of course, if you sell an asset such as a car for its market value, that is not considered to be gifting and does not come under these rules. However, the proceeds of the sale will become an asset.
Be aware that if you plan to claim Centrelink benefits in the future, any gifts in the five years prior to making your claim will be included under these rules.
If you’re not sure how this test affects you, talk to us first.
Department of Human Services website www.humanservices.gov.au “Gifting”