Clarifying gifting rules and their effects on age pension (2024)

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This was published 2 years ago


Noel Whittaker

I am trying to explain the Centrelink gifting rules to my 90-year-old father, who is on a part-pension. He is under the belief that gifting more than $10,000 is prohibited and seems to think his pension would be reduced if he makes gifts. I told him he can gift as much as he wishes. Your clarification would be appreciated.

This is a common misconception.

There is no limit to how much a person can give away, but to prevent people giving away assets just to increase their age pension, gifts above $10,000 in any financial year, or $30,000 over five years, are treated as deprived assets. They are still asset and income tested for the pension for five years from the date of the gift.

Clarifying gifting rules and their effects on age pension (1)

There is no reduction in the amount of pension because Centrelink regards the person’s assets as being unchanged – even though they have been reduced because of the gift.

For example, think about a couple with $800,000 in assessable assets and who are receiving a part-pension. If they gave away $200,000 to their grandchild for a home deposit, the first $10,000 gifted is within allowable limits, and the remaining $190,000 gifted would still be counted as an asset.

However, their pension would be largely unchanged because Centrelink would still regard them as having $790,000 of assessable assets.

In five years, those deprived assets would no longer exist for Centrelink purposes and, depending on other factors at that time, could result in an increase in their age pension.

We are a couple aged 70 and 68 with combined assets of $2.6 million. Our self-managed super fund (SMSF) is in “pension” mode. For the past two financial years, we have withdrawn the reduced half of the 5 per cent required from the SMSF to take as pension, as per government policy because of COVID-19. We qualified for a Commonwealth Seniors Health Card (CSHC) because of the reduced 50 per cent drawdown of pension amounts. Would we still qualify for the CSHC in the current financial year (2022-2023), considering we will have to take the full 5 per cent pension for each of us?

I do not think you fully understand the way the income test works for the CSHC.

It has nothing to do with the amount that you withdraw from your SMSF each year.

The income test for the CSHC is $57,761 each year for a single and $92,416 each year combined for a couple.

The test looks at both your adjusted taxable incomes and a deemed amount from account-based income streams.

Under the deeming rules, $4 million of income-producing super would have a deemed income of $88,220 a year.

If the bulk of your assets are in super, your adjustable taxable income would be minimal, and you could have $4 million in your fund in pension mode as a couple and still be under the limit.

I am a contract teacher aged 65, have super worth $95,000 and $100,000 in a term deposit, which has been languishing with poor interest for several years. I am thinking a better move would be to close the term deposit account and put the money into my super as a non-concessional contribution. Do you think this would be a good move?

You are 65, which means you have no risk of loss of access to your super – and little to fear from any potential changes in the super rules.

The returns from good super funds have been way ahead of what you can achieve in a bank term deposit, so it makes sense to move the money to super.

Keep in mind that you can make tax-deductible contributions of up to $27,500 a year, including your employer’s compulsory contribution.

You may be better off to make part of the contribution from after-tax dollars, and the balance by pre-tax deductible contributions. Seek some financial advice and do your sums.

I have a two-year-old and have set up a children’s bank account with bonus interest. It has a balance of close to $10,000. Is this the best option? What tax-effective investment options are available for children, or should I invest under my name until she is 18?


I have long suggested that insurance bonds are the best investment to build up savings for children and grandchildren because there is nothing to declare on anybody’s tax return each year, as the earnings accrue as bonuses.

Furthermore, at any stage the bond can be transferred to the child free of Capital Gains Tax.

An insurance bond is a tax-paid investment, with the fund paying tax at 30 per cent on your behalf. This is why the asset mix is important and why you should seek advice about which bond best suit your goals and your risk profile.

  • Advice given in this article is general in nature and is not intended to influence readers’ decisions about investing or financial products. They should always seek their own professional advice that takes into account their own personal circ*mstances before making any financial decisions.

Noel Whittaker is the author of Retirement Made Simple and numerous other books on personal finance. Email:



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