Gifting is when you or your partner give away assets or transfer them for less than their market value.
Gifting may affect your payment
You or your partner can give away money, other assets or income to any value you choose at any time. Before you make a gift, you should carefully consider the effect it may have on your financial security. You should also check how it will affect your payment by contacting us.
The rate of income support payment you or your partner receives may be affected if your or your partner's assets are given away and the amount assessed as gifted is more than the allowable gifting amount. For example, you do not receive adequate consideration for the gift or transfer in the form of money, goods or services.
Giving away income can affect your and your partner's payments for an indefinite period.
The gifting rules apply to any gifts made in the 5 years before receiving a pension or allowance, unless you can demonstrate that you could not have expected that you would qualify for a pension or allowance from us.
We assess gifts that you make to see how they directly or indirectly reduce the assets available for your personal use and whether they exceed the allowable gifting amount.
You must tell us about any gifts or transfers within 14 days of when they have occurred.
Examples of gifting
If you transfer your shares or units in a trust or company and do not receive full market value for them, you may be considered to have gifted them.
If you relinquish control of a private trust or private company, you will be considered to have gifted all the assets held by the trust or company.
Allowable gifting amount
A single person has a gifting free area of $10,000 per financial year, limited to $30,000 per 5 financial years.
A couple has a total combined gifting free area of $10,000 per financial year, limited to $30,000 per 5 financial years.
If the total of gifts made in a financial year exceeds $10,000, the excess will be assessed as a deprived asset. This is called the $10,000 rule.
A maximum of $30,000 can be gifted over a rolling period of 5 financial years, but must not exceed $10,000 in any 1 year to avoid deprivation. Only $30,000 of gifting in a 5 year period can be exempted. This is called the $30,000 rule.
If you gift more than the allowable amount
Any gift or gifts with a total value greater than the allowable amounts will be assessed as a deprived asset for 5 years from the date of gift and will be subject to the income deeming provisions. This may change if a gift is returned.
Julie makes several gifts within a 5 year period.
|Date||Gift||Amount that is within the annual Gifting Free Area||Amounts within last five year's annual Gifting Free Areas||Amount maintained as a financial asset|
|1 May 2009||$8,000||$8,000
(less than $10,000)
|1 June 2010||$13,000||$10,000
|$18,000||$3,000 until 31 May 2015
($13,000 - $10,000)
|1 April 2011||$7,000||$7,000
(less than $10,000)
|1 May 2012||$11,000||$10,000
|$35,000||$6,000 until 1 May 2017
($11,000 -$10,000) +
($35,000 - $30,000)
Other examples where gifting has occurred:
- you own a rental property valued at $380,000 and sell it to your daughter for only $200,000
- you bought a car for your daughter as a present
- you are donating 10% of your wages to your church
- you forgive a loan
- you are required to repay your son's business loan because you were a guarantor, or
- you put money into a family trust that you and your partner do not control
Gifting does not include selling or reducing your assets to meet normal expenses. For example: to buy a fridge or washing machine, for home maintenance or improvements or to pay for holidays. Nor does it include payments for services received, such as lawn mowing.
Examples where gifting has not occurred:
- you own a house valued at $380,000 but sell it for $350,000 on the open market because this was the best offer to date and you did not believe waiting for a higher offer was advisable - you have received adequate consideration
- you have a debt that you do not have the capacity to repay so you transfer a car worth about the same to wipe out the debt - the removal of the liability is adequate consideration, or
- you put money into a family trust that you and your partner control
If you or your partner give away income, or refuse to accept an increase in your income, and do not receive adequate consideration, the deprived income may be maintained indefinitely in the pension or allowance assessment from the date of deprivation.
Frank receives a superannuation pension of $6,000 per year. He decides to forgo an increase of $1,000 per year to his superannuation pension because he does not want his Age Pension to be reduced.
This is deprivation of income and the increase of $1,000 per year would be assessed and would affect his rate of Age Pension indefinitely.
Where you sell an asset or dispose of income and receive money, goods or services to the same value, then it is considered that you have received adequate financial consideration.
Where nothing or less than the value of an asset is received in return, then consideration is inadequate and deprivation has occurred.
When a property, home or farm is transferred to another party for less than its value, there are other factors and exceptions that we consider. For example, if a house is transferred for less than its value, there is an arrangement for living costs as a result. This is known as a granny flat interest. Read more about granny flat rules.
If a farm is transferred for less than its value in recognition of past contributions, we look at the value of those contributions. This is known as forgone wages. You can read more about forgone wages on our Rural Customer and Primary Producers page.