There are many rumours and well-intentioned but wrong advice out here on the internet about how to maximise Centrelink or DVA pension by “gifting assets” before applying. I want to clear up some of those misunderstandings
The gifting and deprivation rules prevent you from giving away assets or income over a certain level in order to increase age pension and allowance entitlements. For Centrelink and Department of Veteran’s Affairs (DVA) purposes, gifts made in excess of certain amounts are treated as an asset and subject to the deeming provisions for a period of 5 years from disposal.
Acknowledgement: I relied originally in 2017 on the excellent guidance of the AMP TAPin team for the majority of the content in this article. They write great technical articles for advisors and I try and make them SMSF trustee friendly. I have now updated the article and take responsibility for all data in this latest version.
What is considered a gift for Centrelink purposes?
For the deprivation provisions to apply, it must be shown that a person has destroyed or reduced the value of an asset, their income or a source of income.
A person disposes of an asset or income when they:
- engage in a course of conduct that destroys, disposes of or reduces the value of their assets or income, and
- do not receive adequate financial consideration in exchange.
Adequate financial consideration is accepted when the amount received is reasonably close to the market value of the asset. You may need an independent market valuation to support the value you have used, or Services Australia may use its own resources to value the asset.
Deprivation also applies when the gifted asset doesn’t count under the assets test at all. For example, unless the granny flat provisions apply, deprivation is assessed if a person does not receive adequate financial consideration when they:
buy a new principal home in another person’s name.
transfer the legal title of their principal home to another person, or
What are the gifting limits?
The gifting rules don’t stop you from giving anything to anyone. What they do is cap how much a gift can reduce your assessable assets and income, and so how much it can increase your social security entitlements.
There are two gifting limits, and they apply together:
- $10,000 per financial year. This is the limit for a single person, or the combined limit for a couple. It is not $10,000 each.
- $30,000 over a rolling five financial year period.
So you can keep gifting up to $10,000 a year without penalty, but you also need to stay under the $30,000 limit across any rolling five-year window. Neither limit is indexed. They have not changed in more than 20 years and still apply in 2026/27.
What happens if the gifting limits are exceeded?
If you go over either limit, the excess is treated as a “deprived asset” of you and/or your partner.
The deprived amount is then assessed for five years from the date of the gift. It counts under the assets test, and it is deemed to earn income under the income test. The dollar figure stays the same for the whole five years. It doesn’t grow or shrink with the value of whatever you gave away. Once the five years are up, it is no longer counted as your asset and is no longer deemed.
What it costs you in 2026/27. From 20 September 2026, deeming rates are 1.75% on financial assets up to $66,800 for singles ($110,600 combined for pensioner couples) and 3.75% on anything above that. Under the assets test, every $1,000 of assets above the full pension threshold reduces your pension by $78 a year. A $20,000 deprived asset could therefore cost a pensioner on the assets test about $1,560 a year in pension, every year for five years, for money they no longer have.n of the 5 year period, the deprived amount is neither considered to be a person’s asset nor deemed.
Example 1: Single pensioner, gifts not affected by the deprivation rules
Sally is a single pensioner with financial assets of $275,000. She wants to gift some money to her son to help him get ahead. Her gifting plan is:
| Financial year | 2026/27 | 2027/28 | 2028/29 | 2029/30 | 2030/31 | 2031/32 |
|---|---|---|---|---|---|---|
| Amount gifted | $6,000 | $6,000 | $6,000 | $6,000 | $6,000 | $6,000 |
Neither gifting rule affects Sally. She stays under $10,000 in every financial year, and any rolling five-year window adds up to exactly $30,000 ($6,000 × 5), which is within the limit. No deprived asset is assessed.ear period.
Example 2: Single pensioner, gifts affected by both rules
Peter receives the Age Pension. He gives away the following amounts:
| Financial year | Amount gifted | Deprived asset under the $10,000 annual rule | Deprived asset under the $30,000 five-year rule |
|---|---|---|---|
| 2026/27 | $33,000 | $23,000 | $0 |
| 2027/28 | $2,000 | $0 | $0 |
In 2026/27, $23,000 of the $33,000 is over the $10,000 annual limit. That $23,000 is treated as Peter’s asset and deemed for five years from the date of the gift.
In 2027/28, Peter has given away $35,000 in total. However, amounts already assessed under the annual rule are taken out before the five-year rule is applied:
$33,000 + $2,000 − $23,000 = $12,000
That’s well under $30,000, so no extra deprived asset is assessed under the five-year rule.
On the cost: if Peter is assessed under the assets test, the $23,000 deprived asset could reduce his pension by about $1,794 a year ($23 × $78) until the five years are up.s totalling $35,000 have been made, no deprived asset is assessed under the five-year rule after taking into account the deprived assets already assessed, ie $33,000 + $2,000 – $23,000 = $12,000, which is less than the relevant limit of $30,000.
Example 3: Couple affected by both rules
Ted and Alice receive the Age Pension. They give away the following amounts:
| Financial year | Amount gifted | Deprived asset under the $10,000 annual rule | Deprived asset under the $30,000 five-year rule |
|---|---|---|---|
| 2023/24 | $10,000 | $0 | $0 |
| 2024/25 | $13,000 | $3,000 | $0 |
| 2025/26 | $10,000 | $0 | $0 |
| 2026/27 | $10,000 | $0 | $10,000 |
| 2027/28 | Any gift in 2027/28 is assessed in full as a deprived asset under the five-year rule |
Working through it year by year:
- 2024/25: $3,000 of the $13,000 is over the $10,000 annual limit, so it is a deprived asset for five years.
- 2025/26: Gifts counted against the five-year limit are $10,000 + $13,000 + $10,000 − $3,000 = $30,000. That reaches the limit but doesn’t exceed it, so nothing extra is assessed.
- 2026/27: The count is now $10,000 + $13,000 + $10,000 + $10,000 − $3,000 = $40,000, which is $10,000 over the $30,000 limit for the five-year period starting 1 July 2023. Although the 2026/27 gift is within the annual limit, all of it is a deprived asset for five years.
- 2027/28: The five-year window (2023/24 to 2027/28) has no free area left, so any gift this year is assessed in full.
From 1 July 2028, 2023/24 falls out of the window and Ted and Alice will have up to $10,000 of free area available again.ven away in 2021/22 exceeds the gifting limit for that year, so it will continue to be treated as an asset and subject to deeming for five years. The $10,000 given away in 2022/23 exceeds the $30,000 limit for the five-year period commencing on 1 July 2020, so it will also continue to be treated as an asset and subject to deeming for five years.
Are some gifts exempt from the rules?
Certain gifts can be made without triggering the gifting provisions. Broadly speaking, these include:
− Assets transferred between the members of a couple. A common example is where a person who has reached Age Pension age withdraws money from their superannuation and contributes it to a superannuation account in the name of the spouse who has not yet reached age pension age.
− Certain gifts made by a family member or a certain close relative to a Special Disability Trust. For more information on Special Disability Trusts, refer to Department of Human Services – Special Disability Trusts.
− Assets given or construction costs paid for a ‘granny flat’ interest. See Department of Human Services – Granny Flat Interest for further detail.
Trying to be too smart – Gifting prior to claim
Contrary to what many read on the internet any amounts gifted in the five years prior to accessing the Age Pension or other allowance are subject to the gifting rules
Deprivation provisions do not apply when a person has disposed of an asset within the five years prior to accessing the Age Pension or other allowance but could not reasonably have expected to become qualified for payment. For example, a person qualifies for a social security entitlement after unexpected death of a partner or job loss.
Trying to be too smart – Gifting to a Family Trust
Trying to be too smart: gifting to a family trust
Putting money or assets into a family trust does not get you around the gifting rules.
If you don’t control the trust, the transfer is treated as a gift, the same as giving money directly to a person. The $10,000 and $30,000 limits apply, and any excess is a deprived asset assessed and deemed for five years.
If you do control the trust, the outcome is usually worse. Under the private trust rules, Services Australia can treat you as an “attributable stakeholder” if you or your partner (or your associates) control the trust, for example as trustee, director of the trustee company or appointor, or if you transferred assets into it. The trust’s assets and income are then attributed back to you, often in full, and counted as yours under both tests. This attribution doesn’t end after five years. It continues for as long as you have that control or link.
Gifting and deceased estates
The gifting rules apply to your interest in a deceased estate if you:
- give away your right to your interest in the estate for no or inadequate consideration,
- direct the executor to distribute your interest to someone else for no or inadequate consideration, or
- give your interest to someone else, for no or inadequate consideration, after the estate has been finalised.
These rules apply even if the deceased died without a will.
Gifting and death of a partner
Sometimes a pensioner couple gives away assets and then one of them dies. While both were alive, the deprived assets were assessed against the couple for five years from the date of the gift. So what happens to the surviving partner?
It depends on who legally owned the asset before it was gifted.
Table 1: Gifting and death of a partner
| Legal owner of the gifted asset | Deprived asset assessed against the surviving partner |
|---|---|
| Jointly | Doesn’t change. The survivor keeps their own share, and the deceased partner’s share is not transferred to them. |
| The deceased partner | Reduces to zero. |
| The surviving partner | Increases to include the share previously assessed against the deceased partner, so the full outstanding amount is now assessed against the survivor. |
Example 4: Death of a partner
Daryl (84) and Gail (78) gifted an apartment worth $260,000 to their son Ethan on 1 July 2025. They had made no other gifts in the previous five years, so after the $10,000 free area Centrelink assessed $250,000 as a deprived asset. As a couple, half of that ($125,000) was held against each of them. Daryl passed away on 1 July 2026, with the deprivation period still running until 1 July 2030.
How Gail is assessed depends on who legally owned the apartment:
| Legal owner of the gifted asset | Deprived asset assessed against Gail |
|---|---|
| Jointly | Gail’s share of $125,000 doesn’t change. Daryl’s $125,000 share isn’t transferred to her, so $125,000 is assessed against Gail. |
| Daryl | Nothing carries over. The amount assessed against Gail is $0. |
| Gail | Gail is assessed on the full $250,000, her own $125,000 plus Daryl’s $125,000. |
Remember that Gail is now assessed as a single person. That means lower assets test thresholds and a lower deeming threshold ($66,800), so the same deprived amount can have a bigger effect on her pension than it did when she was part of a couple.
A practical tip: keep a gifting log
If you’re a pensioner, or expect to claim within five years, keep a simple record of every gift: the date, the amount, who received it and, for assets, how you valued them. Services Australia asks about gifts in the past five years when you claim, and pensioners must report changes in their circumstances within 14 days. If you lend money to family instead of giving it, put the loan in writing. A documented loan is still your asset (and is deemed), but forgiving it later counts as a gift.
Want a Centrelink Review or are you just looking for an adviser that will keep you up to date and provide guidance and tips like in this blog? Then why not contact me at our Castle Hill or Windsor office in Northwest Sydney to arrange a one on one consultation. Just click the Schedule Now button up on the left to find the appointment options. Do it! make this the year to get organised or it will be 2030 before you know it.
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Liam Shorte B.Bus SSA™ AFP
Financial Planner & SMSF Specialist Advisor™
Tel: 02 98993893, Mobile: 0413 936 299
PO Box 6002 Norwest NSW 2153
40/8 Victoria Ave. Castle Hill NSW 2154
Corporate Authorised Representative of Viridian Advisory Pty Ltd ABN 34 605 438 042, AFSL 476223
GENERAL ADVICE WARNING
This information has been prepared without taking account of your objectives, financial situation or needs. Because of this you should, before acting on this information, consider its appropriateness, having regard to your objectives, financial situation and needs. This website provides an overview or summary only and it should not be considered a comprehensive statement on any matter or relied upon as such.
Sources:
- Services Australia – Hank Jongen column: Centrelink’s assessment of gifting
- Services Australia Operational Blueprint – deprivation and death of a partner
- National Seniors – deeming rates media release, 20 Aug 2026
- Savings.com.au – Centrelink payments to rise in September
- Pay Calculator Australia – Deeming rates 2026
Shirley Kennedy
/ October 5, 2024My granddaughter needs an operation and out of pocket costs are expensive and her parents can’t afford the costs. I would like to help. Is this considered as gifting?
SMSF Coach - Liam Shorte
/ October 7, 2024Hi Shirley, yes this would be considered gifting but that doe snot stop you giving the funds to your granddaughter, it just means the excess over $10K will still be treated as your asset for up to 5 years depending on how much you have gifted previously. You can gift 10K per year up to $30K in any 5 year rolling period and those funds will not be treated as deprivation of assets. So you should not hesitate to help just because of Centrelink rules. In your case I understand this may be concerning so I am happy to walk you through the rules by phone on 0413936299 if you want. Liam
Maxwell Russek
/ July 14, 2022as a pensioner I am planning on getting married in a few months and cannot get clarity on the pension rules:
My future 55 year old future wife is planning on gifting her house to her son prior to our marriage, Will Centrelink see this a previous joint asset and stop my pension for a five year period ? As this took place prior to our marriage ?
Andrew Mero
/ May 19, 2020Hi, my father has $175,000 in the bank along with the unit he owns outright and no other assets. He is receiving aged pension. If he Gives $150,000 (In total) to my brother and I, will he still be entitled to the full pension in spite of the amount exceeding gifting amounts as his total assets are still below the asset threshold for the aged pension?
SMSF Coach - Liam Shorte
/ May 20, 2020Generally if a person is below the asset limit then the gift will not affect their pension unless their circumstances change. The $150k less the annual limit will be treated as a gift for 5 years so if they suddenly have to go into care and sell their home, their assets for any tests would still include the net gifted amount which may affect their age pension or means tested fee. Also consider what if the gift giver may need those funds later for healthcare or other reasons. You should get advice on your father’s specific circumstances.
Kenneth Ang
/ August 2, 2019You said your gifting is not exempted if you give 5 years before accessing aged pension. Yet you said that deprivation provision does not apply when you dispose of an asset within 5 years of accessing the aged pension?
Bob Jones
/ July 3, 2019I am an aged pensioner. I regularly deposit cash into my childrens and grandchildrens bank accounts for birthdays , christmas and other special occasions. I also do this for my overseas stepfamily. The amounts are usually small $25- $100. Currently, total amount annually is $1000-$2000. i have not notified Centrelink of these gifts because they are well within gifting rules. I have records of all payments.
I am about to receive an inheritance and intend to increase the value of these gifts. I keep records of all payments and remain well under Centrelinks’ $10,000 and 5 year $30,000 rules. Am I taking a risk by not informing Centrelink.
Surely they dont want to know every time I buy a present for or give a small amount to friend’s childs for their birthday??
SMSF Coach - Liam Shorte
/ July 3, 2019I always suggest clients update Centrelink twice yearly via MyGov if they are well under the limit but contact them immediately if they go over the limit to avoid Centrelink debt. Better safe than sorry. Instructions here https://www.humanservices.gov.au/individuals/online-help/centrelink/update-your-income-and-assets-details
Bob Jones
/ July 3, 2019Found this info re the $2000 notification requirements on a departmental search. Australian Government | Department of Human Services
Australian Pension News Issue 36
What you must tell us
Our lives are always changing and some of these changes affect how much money we give you. It’s important you tell us within 28 days of changes to your personal circumstances.
These changes may be to your or your partner’s:
• income or assets where the change is more than $2000
• financial investments and bank accounts
• personal circumstances, including changes to your address, marital status or your school age dependants
• international travel plans, and
• compensation claims.
Actual document:
https://www.humanservices.gov.au/sites/default/files/documents/int001-1510en.docx
So it seems to me I only have to notify Centrelink if I exceed their
$10,000 and $30,000 gifting rules or when one individual gift exceeds $2000.
James Holborn.
/ June 12, 2019My wife and I have recently been reallocated our age pension back having had it removed with the rule change in January 2017. However we now are governed under the deeming rules which apply to all us peasants but not to those that make the rules. My question is after calculating the amount of tax we will both have to pay does the $18000-00 tax free threshold apply to both our amounts owing.
Your advice greatly appreciated.
Jim
SMSF Coach - Liam Shorte
/ June 12, 2019yes James your are entitled to the $18,200 Tax Free Threshold and also most likely the Low Income Tax Offset (LITO) and the Seniors And Pensioners Tax Offset (SAPTO). Read more about tax after 65 here https://smsfcoach.com.au/2014/07/11/how-much-can-i-earn-outside-of-my-smsf-tax-free/
Try the ATO Calculator here https://www.ato.gov.au/calculators-and-tools/beneficiary-tax-offset-and-seniors-and-pensioner-tax-offset-calculator/
Jim Holborn
/ June 12, 2019Many thanks for your advice. It is greatly appreciated. I assume the $18200-00 rebate applies to both of us.
Regards
JIm Holborn
SMSF Coach - Liam Shorte
/ June 12, 2019yes each individual tax payer entitled to a tax free threshold of $18,200 and other allowances are per person too.
Kerry Burgess
/ May 30, 2019Can we lend our son and daughter in law $100,000 at the time of the sale of one of our investment properties to them and if we charge them $2000.00 (2%) per year interest, equivalent to what we would earn if that money was sitting in a bank account and therefore not depreciate the value of that asset as gifting would do? Does it avoid the depreciation of that asset ($100,000) as stated in the article above?
SMSF Coach - Liam Shorte
/ June 1, 2019You can certainly document it as a loan instead of a gift. You can charge whatever interest you want but Centrelink will still deem it at the applicable rates. The first $51,200 ($85,000 for couples) of you financial assets are deemed to earn the lower deeming rate of 1.75% and any amount above that at 3.25%.
Stacey
/ March 1, 2019Hi. I’m 34 and want to gift my mother who is 69 $10000 of my super. She no longer has a super account so how would I go about doing this? I’m with Cbus and have no idea what forms I would have to fill out or even where to find them or if it’s even possible.
SMSF Coach - Liam Shorte
/ March 1, 2019Hi Stacey, as you are under 60 you cannot access your Super to gift to anyone. You must meet a Condition of Release before accessing your Super. Please see more details here https://www.ato.gov.au/super/apra-regulated-funds/paying-benefits/releasing-benefits/conditions-of-release/ Best wishes, Liam
Stephen
/ September 11, 2018Hello Liam,
I might be missing something. Leaving aside the deeming rules, if you are using financial assets to fund an excess gift, then isn’t it a status quo outcome for the assets test – the dimunition of the bank account balance is replaced by the value of the excess gift.
SMSF Coach - Liam Shorte
/ September 11, 2018Hi Stephen, I am not sure which point you are are talking about. Yes if you exceed the gifting rules then the amount in excess is still treated as an asset for 5 years so the asset test outcome is the same (for 6 years) as if you had not gifted that excess amount.
James Holborn
/ July 20, 2018On the 1st January 2017 my wife and I were ruled ineligible for a part pension because of higher than allowable assets. If we gift the allowable $30000-00 over 3 years ($10000 per financial year) are there any ramifications when we reapply for our aged pension.
Many Thanks
Jim.
SMSF Coach - Liam Shorte
/ July 20, 2018As long as you stick to the gifting limits there will be no ramifications and the asset test limits should also rise a little over that time too. Make sure to revalue cars and other assets as well. Consider in your circumstances if a pre-paid funeral or funeral bond might be suitable as these are not counted as assets either up to $13,000. Always take the opportunity to see or talk to a Centrelink Financial Information Service Officer about your specific circumstances by calling 13 23 00.
CARMEN DARMANIN
/ July 18, 2018Hi
I was retrenched back in 2015 and as l reached and met my preservation requirements (60) pulled out of super back in 2017 electing to paying myself my lost income, l also receive rental income on my mortgage free property.
l live with my elderly mum as a full time career in her home with no Centrelink benefits and assist her with expenses.
I reach pension age in the next 5 years and hoping to reduce my income to be able to qualify for a part or full pension, currently l am over the thereshold.
Please can l ask will my assets and current income of which rental income will cease within the next 2years be assessed by Centrelink at the time of pension age application as the drawing down of my income had commence approx back in 2015 lapsing well over the 5 year period and wiping out the ledger so to speak.🐨🇦🇺🐨🇦🇺🐨
SMSF Coach - Liam Shorte
/ July 18, 2018Hi Carmen, I can’t give personalised advice on here so my suggestion would be to make an appointment with a Centrelink Financial Information Service Officer by calling 132300 and sit with them to look at you future eligibility so you have an idea now and can plan for the future.
In general they will only assess you on the current income at the time of application so if you move back in to the home and stop receiving rental income then the house is exempt and you have no rental income to report. This is general advice and does not take in to account your full personal circumstances.
You can also try a Age a Pension calculator like http://yourpension.com.au/ to run the figures yourself
Peter
/ April 26, 2018I’m planning to sell my principal home with market value of $700,000.00.
With this money I will buy a house in the Philippines worth $200,000.00 and split the $500,000.00 to my son and daughter as inheritance. Do you consider this as gifting even though it’s from the proceeds of the sale of the principal which is not included in the asset test?
SMSF Coach - Liam Shorte
/ April 26, 2018Hi Peter, yes it is considered gifting regardless of the fact it came from sale of the home. It is considered a deprivation of assets …so you are depriving yourself of the benefit of that money and the interest it could earn. More detail here https://www.humanservices.gov.au/individuals/enablers/gifting
wayne
/ April 12, 2018I deposit $60 every fortnight into my 2 sons bank account total $120 from my carers pension doi have to tell centerlink every fortnight
SMSF Coach - Liam Shorte
/ April 12, 2018Hi Wayne. you are gifting $120 per fortnight which is $3120 per year. A person is allowed to gift $10,000 in any one year up to a maximum of $30,000 in any 5 year period. So you do not breach the $10,000 per year limit and over the 5 years you do not breach the $30,000. Therefore you are fine and do not need to report any of this to Centrelink as long as this is the only money you are gifting to the boys. I would suggest for peace of mind that you ask the same question to a Centrelink Financial Information Service Officer (FIS Officer) by calling 132 300. They are very helpful and you can read more about their services here https://www.humanservices.gov.au/individuals/enablers/about-financial-information-service
Helen
/ January 22, 2018Can when my husband finishes his working life at 66 ( in 2years time ) transfer his super into my super account as I’m only 55 and would be still in the accumulation phase of super so we can maximise the amount he can get on the aged pension thanks Helen
SMSF Coach - Liam Shorte
/ January 22, 2018Short answer is yes and a good plan where there is an age difference but you need to get personal advice to ensure the strategy is right for your family and circumstances. You are locking funds away for 5-10 years minimum in return for possible higher age pension entitlements. You need to ensure you get it right. An early inheritance, changes to legislation and a number other issues could mess up your plans.
Suzanne Burrows
/ January 15, 2018on 18/11/16 I borrowed $200,000 from my mother who is on an aged part-pension. I pay her interest at the rate of 3% which is almost twice the rate she was receiving on this money in the bank. I pay her back $200 per week which helps with her nursing home fees and reduces the need to draw down on her cash investments. This amount is made up of principle and interest. As a loan this amount remains an asset for Centrelink purposes.
On 25/12/16 she gifted to me $10,000 in the form of forgiveness of principle owing. Centrelink was informed. When I update her assets I also update the balance owing on the loan.
I would like to repeat this gifting process to hopefully get Mum a bit more pension. The reduction of principle would also result in a very small reduction of interest for me. I would seem to be within the rules for both the yearly limit and the five year limit. Can you confirm that and would this result in an increase of Mum’s pension?
Thank you
Suzanne
SMSF Coach - Liam Shorte
/ January 15, 2018Susanne, you should ask a Centrelink Financial Information Service Officer to look at your mum’s situation for certainty but a person is allowed gift $10’000 per year up to $30,000 in a rolling 5 year period. Within these rules a gift of $10,000 would reduce assets under the asset test and result in more pension if the person is asset tested.