Want to give away your assets? There are rules.

With the approaching implementation of new thresholds under the age pension assets test, Australians who are currently receiving a part pension might be looking at ways to reduce the value of their total assets to continue receiving an age pension benefit under the new levels. If doing this has crossed your mind, 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 ruling affects you, talk to us first.

Source: 

Department of Human Services website www.humanservices.gov.au “Gifting”