The value of any assets you give away or sell for less than their value may still count towards your assets test and income test for payments from us.
What is and isn’t gifting
Gifting is where you:
- give away assets, or
- transfer them for less than their market value
What is gifting
For example if you or your partner:
- transfer your shares or units in a trust or company and don’t get full market value for them
- give up control of a trust or company - this is a gift of all the assets the trust or company holds
- own a rental property worth $380,000 and sell it to your daughter for only $200,000
- buy a car for your daughter as a present
- have 10% of your wages donated to your church
- forgive a loan
- have to repay your child’s business loan because you guaranteed it
- put money into a family trust and neither you nor your partner control the trust
What isn’t gifting
- selling or reducing your assets to meet normal costs such as a fridge, a holiday or home improvements
- paying for services, such as lawn mowing
For example it’s not gifting if you:
- own a house valued at $380,000 but sell it for $350,000 on the open market - this was the best offer to date and you didn’t think it was a good idea to wait for a higher offer
- have a debt that you can’t repay, so you transfer a car worth about the same to wipe out the debt
- put money into a family trust that you or your partner control
How gifting can affect your payment
You or your partner can choose to give away any amount of money, assets or income at any time. But before you do, make sure you know what effect it may have on your financial security.
We assess your gifts to see:
- how they reduce your assets
- if they go over the allowable amounts for gifting
Any gifts you made in the past 5 years may count in your assets and income tests.
Before you or your partner make a gift, contact us to check if it will change your payment.
When we may not include a gift
We may not include a gift in your assets and income tests if you:
- are applying for a payment for the first time, and
- can show that when you made the gift you couldn’t have expected to be able to get a payment from us at the time of making that gift
Tell us about any gifts
You must tell us about any gifts or transfers within 14 days.
Allowable gifting amount
This is the most you can gift without affecting your payments from us. Another term for it is gifting free amount.
The amount for a single person or a couple’s combined gifting amount is:
- $10,000 in 1 financial year
- $30,000 in 5 financial years - this can’t include more than $10,000 in any year
If you go over the this amount
For 5 years after the gift date, the asset value over the allowable amount will:
- count in your assets test
- have deeming applied and included in your income test
This may change if the person you gifted to gives the assets back to you from the date they return the gift.
Example: several gifts within 5 years
|Date||Gift||Amount that is within the annual Gifting Free Area||Amounts within last 5 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))
This is where you give away income or refuse an increase in your income and don’t get adequate consideration in return. We include this amount in your income test and can keep doing so forever.
Frank gets a super pension of $6,000 per year. He refuses an increase of $1,000 per year because he doesn’t want his Age Pension to go down.
We call this deprived income. We include the $1,000 in his income test for Age Pension each year. This means his payment from us stays at a lower rate indefinitely.
If you sell or transfer an asset or income in return for money, goods or services to the same value, you’re getting adequate consideration.
If you get less or nothing in return, it isn’t adequate. This means the sale or transfer counts as a gift.
When we assess adequate consideration differently
Granny flat interest
If you transfer a house for less than its value, it may not be a gift if you get a right to live there for life in return. This is a granny flat interest.
Read about the granny flat rules.
If you transfer a farm for less than its value, it may not be a gift if it’s in return for past unpaid work. This is forgone wages.
Read about forgone wages.
Special Disability Trusts
A gifting concession of up to $500,000 combined is available for eligible family members of the principal beneficiary.
Read about Special Disability Trusts.