How Much Tax Do You Pay When Gifting Money To Family Members: Adviser Ratings (2024)




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07 Apr 2017

We want to give $500,000 to our daughter and son-in-law. It is our understanding gifts are tax free but the ATO site says it depends on amount, but is not explicit on amount?

Top answer provided by: Judy Dolan View

Thanks for your question. It is wonderful that you want to gift to your daughter and son-in-law. Regarding the taxation issue, you are correct. Generally gifts are not considered taxable to either the giver or the receiver. The tax office in limited circ*mstances may have reasons to tax and as I am unaware of your personal circ*mstances it would be best to get the advice of a tax adviser to determine your individual tax situation.

You and your partner can give away money and other assets up to any value your chose at any time. There are a number of other things that you should consider though when gifting money. Firstly, before you make the gift, I would recommend that you should carefully consider the impact it will have on your own financial security to ensure that you personally will not be materially impacted, especially in your retirement. It would be best to speak with a financial adviser as to the impact that this may have prior to making the gift to ensure that your own financial security is not impacted. It is good and well helping your children but if it is to you own financial detriment you have to determine whether it is worthwhile

You also never know what the future holds. Your daughter and son-in-law may have a very strong relationship now but the truth of the matter is, that unfortunately, one in three marriages end in divorce. I am sure that you would not like to see half of your generous gift be part of a financial divorce settlement. My advice would be to speak with a solicitor and look at putting in place a loan or mortgage agreement so that if your daughter and son-in-law were to divorce that the monies that you have gifted then get returned to you. Obviously there would be cost involved in setting this up but it is protection against this unfortunate event. The monies could then be gifted back to your daughter to help set herself up financially after the divorce.

You also have not mentioned if there are other siblings involved. If there is this could pose a number of issues whereby the other siblings may not be in receipt of a gift such as this. You may, as a result want to put in place some equalisation via your estate plan to ensure that all your children receive a similar benefit on your passing.

There is no mention whether you are in receipt of any Centrelink benefits or may be in the future but gifting can have a number of implications on a persons’ rate of income support from Centrelink. The gifting rules apply to any gifts made in the 5 years before receiving a pension or allowance, so if you are considering applying in the next five years for Centrelink you need to advise Centrelink of the gift at the time. Both a single person and a couple has a 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 is more than $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 the amount over the above limits will be assessed as a asset for 5 years from the date of the gift and will also be subject to income deeming provisions, impacting on both the assets and income tests.

All the best.


While the Adviser Ratings Website facilitates the question and answer functionality, all such communications are between users and authorised financial advisers, of which Adviser Ratings has no affiliation. Adviser Ratings is not the advice provider and does not provide financial product advice and only provides information that is general in nature.

Article by: Judy Power

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"Need advice: help my niece to pay her tuition fee , paid straight to the school and paid her rent to the company. I'd like to know if included as a gift fund when you retire . Thank you"

Esther Ross 13:07 on 21 Feb 22

"Michelle McGratch just think logical if your daughter is on the dole receiving government support are you going to give her $30,000 to buy a house well nice of you. Just can you think straight for the moment which bank is going to give her money no one in this planet and any finance company then don't waste your money send your daughter to work she have to make the regular income history after this she can try don't waste your money everything is in your daughter her future"

Borys 16:27 on 03 Nov 21

"Travis you sense to me really funny guy you never ever run a business in this country basically you been working for someone all your life and you don't know nothing about business and money Sunshine get up because if you go to receive 8 million dollars don't waste your time here and people time just go to your accountant and business advisor and talk to the right people not on free forum your sense to me as big talker and dreamer that's all people with money never will talk anything on this site simple is this"

Borys 16:18 on 03 Nov 21

"Ken just sell it your family house and gif your family members cash no bank transfer no records this way no one have to pay tax just take the written declaration from them they received the money from you for the future if they're will try to sue you bye-bye taxation Office"

Borys 16:15 on 03 Nov 21

"Hi Judy, I failed to mention that I am in Canada and just noticed after sending my initial question that you are not. Sorry for my mistake."

Remy 16:15 on 09 Oct 21

"Hi Judy, I have several issues that are intertwined in my question. First of all I have been off of work and on long term disability since the month of January. Since that time my aunt wanted to help me out and give me part of my inheritance in a form of a living will for an amount of $50K. My mother also did the same thing but for a larger amount of $170K. Basically they both gave me a gift for it is not an inheritance since they are both still with us. They both wanted me to use the money to put down on a condo but I am afraid of 2 things; the first being, do I have to pay taxes on what I received from them or at least what my aunt gave me and can a bank deny me a mortgage because I am on a long term disability. Thank you for your time."

Remy 15:57 on 09 Oct 21

"Hi,I send my parents and my sister money for less than $10,000 a year in total to help them financially. How does this impact on my tax.Thank you"

S Achour 00:41 on 06 Oct 21

"My financial firm is holding (investing) $800,000In an IRA in my name.What are my tax consequences if I give this to six children while alive or at death?"

Jerry 00:36 on 06 Oct 21

"Hi Judy. l am already on an aged pension, l expect to go into aged care home in roughly 10-5 years time, l do not want to be forced to sell my home to pay for this as l worked hard all my life and should be allowed to have my assets pass to my family. Pensioners are not well informed about this, it comes as a shock to many, l am selling my house and giving 100k to my son to invest on a place close to him for me to move to in a couple years time, this will be a gift no conditions, l trust him to do the right thing by me. He will rent the place until l am ready to move, then l will take over the mortgage payments. (ie, pay rent as such) id l understand that after 5 years i will not be penalised for this gift? and do l have to pay a gift tax as soon as l hand the money over? straight forward question, no lectures please l am aware of the risks, thanks Rose"

Rose Duncan 12:08 on 19 Mar 21

"Not sure if this tax advice is for some other country, but if you’re trying to state American tax law, you are wildly incorrect in so many ways. This was almost unreadable. You literally made up laws that do not exist. "

Kelly 22:18 on 08 Jan 21

"both parents are deceased and i want to sell the family house and spilt the money 4 ways. The 4 would recieve roughly $34.000 each. 2 family members are on Centrelink how would this effeect them."

ken 07:58 on 24 Nov 20

"My freind & I are in Tattslotto together & my freind has a membership card in her name only, so if we won tatts say $500,000 & she gives me my half do I get taxed on that?"

Deborah Norris 14:56 on 23 Oct 20

"Hi there, My family (sister, mother and I) want to give my son $500,000 to buy a house. He has saved $40,000 towards the home. Can the 3 of us gift him this money without having to pay tax on it? Are there any consequences?"

Alexandra 02:02 on 08 Oct 20

"Hi Judy can my husband and I gift our daughter' who receives a payment from centrelink 30k for first home without any implications for any of us"

Michelle McGrath 20:51 on 26 Aug 20

"I still dont know if I would pay tax if I had 10,000,000 I won and gave away 1 million and I am retired and on a pension."

Heather Carrigg 14:54 on 12 Jul 20

"I gave my parents $20000 each from a house sale I never got any of it back i want them to be held accountable and my mother not lodging a tax return is fraud and need to refer it to anyone that can confirm that is the case "

Trish Trailer 22:10 on 02 Jul 20

"can I give my son $30.000 to pay of his house will I be charge gift tax"

Elene Mayes 11:36 on 24 Mar 20

"Hi, I research about internal transaction “gift” and “loan agreement” rules in Australia. I thank you if you will help me with how personal reporting this case. It can be site, page or law.Thanks."

Omid 23:39 on 10 Nov 19

"My wife and I have given my daughter $100000 each, plus we have sub divided our 5 acre block and given them half,value $120000. I am a SFR and don't expect to rely on the pension but who knows what might happen. Looking at this gifting tax, will i be locked out of a pension for ever and a day."

Ray Smyth 11:05 on 10 Jun 19

"Hi I’m going to receive a substantial amount of inheritance 8million US dollars what will the tax be on this. Thanks for your time"

Travis 19:10 on 27 May 19

" Judy. The answer was well explained. People can have a free, no obligation consult with many financial advisors, to clarify. Take the time, it's worth it."

Helen 14:48 on 13 Apr 19

"It is quite funny isn't it. You ask a simple question and no-one can answer it. I have 10mill and want to give someone 1 much tax do I pay. Can't be hard can it "

Graham Hill 12:03 on 27 Feb 19

"We have $50K to give to our daughter, still not sure on the tax issue. Kindly explain how we can give it to her tax exempt?"

Ann Taylor 09:18 on 20 Feb 19

"Hi, I'm not quite clear from the answer above -- if the parent is paying income tax on their earnings, would the money being gifted to their children be income tax exempt for the parent, or just the recipient ?Thanks."

Howard Roark 22:45 on 08 Nov 18

"Thans Judy for sharing this very helful advice. My wife were thinking about this very thing and had questions. Your post answered them. Ron"

Rob ferguson 12:39 on 21 Sep 18

"Oops, my apologies to Nancy, my comment of 28 Feb should have referred to John and Ross as the two muppets!"

Kev 07:46 on 01 Mar 18

"Nancy and John's comments make them sound like the two grumpy muppets in the stalls!The question was answered. in Australia generally gifts are not considered taxable to either the giver or the receiver!Judy was right to point out that sometimes a tax liability may arise and that is when people especially those holding substantial monies who can afford to pay for advice should indeed do so. One situation that might be applicable that I can think of, for the payment of tax might be when an asset is sold to fund a cash gift and capital gains tax may be applicable. But it is not gift tax as such.But Nancy and John, plenty of dummies have money and as for Judy "belittling" him, WTF? And Ross, unknot the purse strings and spend a very small portion of your $500k that you have for your daughter in UK and get advice on whether you need to pay any duties or fees on the actual transfer. But know now there will not be a gift duty!! Jeez you people - no simple answers for simple people!"

Kev 16:58 on 28 Feb 18

"Thank you Judyvery informative answer"

nancy 11:37 on 15 Feb 18

"Judy, answer the question, it was simple and yet you didn't answer it. Are you a financial planner and know the details about with which you claim to know or are you a social worker?"

John 20:38 on 10 Feb 18

"The question is not answered, instead you belittle him and sound like his mother! How about assuming he is no dummy when he has that much money to give to his daughter and simply answer the freakin question!! Seriously useless. "

Ross 11:04 on 03 Feb 18

"Sound advice yes and we have considered and will take steps to protect her but the question was not answered. We want to send our daughter, who is living in the UK, $500,000 in one single instalment how much tax if any is to be paid? "

Peter Crack 17:28 on 12 Jan 18

"i own a two storey house which I live and I own a single storey investment property. I want to gift my daughter the two storey house which I live and move into the investment property. Will my daughter or me have to pay a gift tax?"

Danny Fernando 04:25 on 06 Sep 17

"That was a very succinct response to a question that requires further understanding of person/couples position. Well covered."

Rosario 22:19 on 10 Apr 17

"Great answer. No one likes seeing their kids partnerships end in tears, but the reality is that it does happen."

David B 16:14 on 10 Apr 17

"Nice answer Judy. I would like to firstly note that I agree with everything that has been said. The implications of all of the areas above need to be noted however, there is also something to be said for providing money to your children (or others)while you are still alive and can see them getting great benefit or enjoyment from the gift rather than waiting for you to die for them to get the money then.For people who have sufficient resources that they are very unlikely to ever "run out" of funds, gifting can be a very good use of funds."

Tom 16:37 on 07 Apr 17

"Thank you for posting this question and answer. It was something my wife and I are currently pondering."

David Miles 16:08 on 07 Apr 17

"Very sound answer Judy - couldn't have said it better myself"

Jason 16:07 on 07 Apr 17

How Much Tax Do You Pay When Gifting Money To Family Members: Adviser Ratings (2024)


Are gifts of money to family members taxable? ›

A gift tax is a government tax imposed on those who give money or property to others in exchange for nothing (or less than total value). There is typically a tax-free gift limit to family members until a donation exceeds $15,000 (jumping up to $16,000 in 2022). In these instances, the IRS is usually uninvolved.

How much money can be legally given to a family member as a gift in USA? ›

The IRS allows every taxpayer is gift up to $18,000 to an individual recipient in one year. There is no limit to the number of recipients you can give a gift to.

Does the receiver of a gift pay tax? ›

Generally, the answer to “do I have to pay taxes on a gift?” is this: the person receiving a gift typically does not have to pay gift tax. The giver, however, will generally file a gift tax return when the gift exceeds the annual gift tax exclusion amount, which is $17,000 per recipient for 2023.

How much money can you receive as a gift tax free? ›

The basic gift tax exclusion or exemption is the amount you can give each year to one person and not worry about being taxed. The gift tax exclusion limit for 2023 was $17,000, and for 2024 it's $18,000. That means anything you give under that amount is not taxable and does not have to be reported to the IRS.

Can my parents give me $100 000? ›

Can my parents give me $100,000? Your parents can each give you up to $17,000 each in 2023 and it isn't taxed. However, any amount that exceeds that will need to be reported to the IRS by your parents and will count against their lifetime limit of $12.9 million.

Are cash gifts from family considered income? ›

If you gift cash, generally there are no income tax consequences for the recipient, though there could be gift and estate tax implications to the donor. But if you give appreciated securities, the capital gains taxes can be significant.

What is the best way to gift money to family members? ›

Giving cash is the easiest and most straightforward way to accomplish gifting money to family members. You can write a check, wire money, transfer between bank accounts, or even give actual cash.

How does IRS know if you gift money? ›

The primary way the IRS becomes aware of gifts is when you report them on form 709. You are required to report gifts to an individual over $17,000 on this form. This is how the IRS will generally become aware of a gift. However, form 709 is not the only way the IRS will know about a gift.

Who pays the gift tax giver or receiver? ›

Who pays the gift tax? The donor is generally responsible for paying the gift tax. Under special arrangements the donee may agree to pay the tax instead.

Do I have to report gifted money as income? ›

If you receive a gift, you do not need to report it on your taxes. According to the IRS, a gift occurs when you give property (like money) without expecting anything in return. If you gift someone more than the annual gift tax exclusion amount ($17,000 in 2022), the giver must file Form 709 (a gift tax return).

What triggers gift tax? ›

The gift tax is a tax on the transfer of property by one individual to another while receiving nothing, or less than full value, in return. The tax applies whether or not the donor intends the transfer to be a gift. The gift tax applies to the transfer by gift of any type of property.

Who reports gift tax to IRS? ›

The donor is responsible for paying the gift tax. However, if the donor does not pay the tax, the person receiving the gift may have to pay the tax. If a donor dies before filing a return, the donor's executor must file the return.

How can I gift money without tax? ›

6 Tips to Avoid Paying Tax on Gifts
  1. Respect the annual gift tax limit. ...
  2. Take advantage of the lifetime gift tax exclusion. ...
  3. Spread a gift out between years. ...
  4. Leverage marriage in giving gifts. ...
  5. Provide a gift directly for medical expenses. ...
  6. Provide a gift directly for education expenses. ...
  7. Consider gifting appreciated assets.

Can my parents gift me $30000? ›

You most likely won't owe any gift taxes on a gift your parents make to you. Depending on the amount, your parents may need to file a gift tax return. If they give you or any other individual more than $36,000 in 2024 ($18,000 per parent), they will need to file some paperwork.

How do I transfer property to a family member tax free in the USA? ›

Transferring property to a family member via a gift deed is considered a gift of 50% of the property's fair market value. If that value exceeds $16,000, your family member must file a gift tax return to report the transfer.

Do you have to report cash gifts from family? ›

Essentially, gifts are neither taxable nor deductible on your tax return. Also, a monetary gift has to be substantial for IRS purposes — In order for the giver of the sum to be subject to tax ramifications, the gift must be greater than the annual gift tax exclusion amount.

Does the recipient of a cash gift have to report it to the IRS? ›

The Donor Is Responsible for Gift Reporting and Taxes, Not the Recipient. When it comes to reporting gifts and paying any taxes due, the burden falls on the person making the gift. The recipient doesn't have to do anything.

How do I gift a large sum of money to my family? ›

Giving cash is the easiest and most straightforward way to accomplish gifting money to family members. You can write a check, wire money, transfer between bank accounts, or even give actual cash.

Can I give 100k to my son? ›

In the U.S., you do not have to do anything special to avoid taxes on a $100,000 gift. Your son will not pay taxes because the recipient of a gift receives it tax-free. You will have to file an informational gift tax return with the IRS because you gave someone over $17,000 in a year, but no tax is due.

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