I thought I’d just take a moment to talk a little bit about Centrelink’s gifting rules.
So it’s pretty common that I will get people asking me about Centrelink’s gifting rules, because they’re contemplating either gifting some money to their children or grandchildren, or they need to help them out of a bind.
Centrelink don’t discourage you from gifting money to your children or grandchildren, but they do set limits on how much you’re allowed to gift per financial year. I imagine they do this because they don’t want people just giving away all their money so they can qualify for pension or Centrelink benefits.
Under the rules, you’re allowed to gift up to $10,000 per financial year, up to a maximum of $30,000 over five financial years. Any amount that you do in excess of these limits is counted as an asset. So it’s like you still have the money sitting in your bank account, even though you’ve given it away. So, hypothetically, if you gave away $30,000, the 1st $10,000 is within the limits, so not counted. But the remaining $10,000 would still be counted as an asset. After five years, though, that would drop off, and it would be like that money never existed from Centrelink’s perspective.
If you’re gifting money, it can potentially have an impact on your benefits as a result, and should be something you consider when deciding whether to gift that money, but by no means should discourage you from gifting that money, or trying to help your kids out of a bind, or if you want to give them a bit of a leg up. It may be harder to deal with the emotional side of not giving the money than the financial side of it if you were to give the money.
If you do need to have a chat about it, though, and talk about your specific circumstances and what impact it may have on you and whether you should do it, feel free to get in touch.