⚠️ Senior Editor's Note (2026 Update): Services Australia (Centrelink) enforces strict "Gifting Rules" to prevent pensioners from offloading assets to qualify for higher payments. Violating these limits triggers "Deprivation," where the gifted money is deemed to still be in your possession for 5 years. Always consult a Financial Information Service (FIS) officer before transferring large sums.
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| Giving Money to Your Kids? |
You have worked hard all your life. Now, you want to help your daughter enter the 2026 property market or buy your grandson a car for his 21st birthday.
It is your money, right? You should be able to do whatever you want with it.
Wrong. If you are receiving (or planning to receive) the Age Pension, the government is strictly monitoring your asset disposal.
Centrelink applies a mechanism called the "Deprivation Rule." If you give away assets exceeding the allowable limits, they will assess you as if you still own them, cutting your pension payments accordingly. In this guide, we clarify the "Safe Limits" for 2026.
The Hard Limits: $10,000 and $30,000
Centrelink allows you to gift money or assets, but there are strict caps on how much is exempt from the Assets Test.
- Annual Limit: You can gift up to $10,000 per financial year (July 1 to June 30) without penalty.
- 5-Year Rolling Limit: You can gift a maximum of $30,000 over any 5-year rolling period.
Crucial Note: These limits apply to a combined couple, not per person. You cannot gift $10k while your partner gifts another $10k. The total limit for the household is strictly $10k.
What Happens If You Go Over? (The Double Penalty)
Let's say you give your son $50,000 to help with a house deposit. That is $40,000 over the annual allowable limit ($50k - $10k = $40k).
Centrelink will apply the Deprivation Rule:
| Perspective | The Reality |
|---|---|
| Real Life | The $50,000 is gone. You no longer have access to it. |
| Centrelink's View | "We will count that excess $40,000 as YOUR asset for the next 5 years." |
| The Financial Hit | Reduced Pension + Deemed Income applied to money you don't have. |
You lose twice: you lose the cash you gave away, and you lose a portion of your pension because the government assumes you still have the money earning interest.
Does Selling Your House Cheaply Count?
Yes. This is the most common trap.
If you sell your $900,000 home to your child for $700,000, Centrelink views the $200,000 discount as a GIFT.
That $200,000 will be assessed as a deprived asset for 5 years. Depending on your total assets, this could completely disqualify you from the Age Pension or significantly reduce your fortnightly payments.
Smart Ways to Help (Without Losing Pension)
How can you support your family without triggering a penalty?
- The "June/July" Split: Gift $10,000 just before June 30, and another $10,000 just after July 1. You transfer $20,000 in a week but spread it across two financial years (ensure you stay under the $30k rolling cap).
- Granny Flat Interest: You can transfer a large sum or property title in exchange for a legal "right to reside" in your child's home for life. Specific exemptions apply if structured correctly.
- The 5-Year Horizon: If you plan to apply for the Age Pension at 67, make any large gifts before you turn 62. The 5-year deprivation period will expire just as you apply.
Chief Editor’s Verdict
The government expects you to use your savings for your own retirement, not your children's inheritance.
Your Action Plan
1. Keep meticulous records of all gifts exceeding $500.
2. Adhere strictly to the $10,000/year limit (and $30k/5 years).
3. If you must transfer a large amount, consult a financial planner to understand the "Granny Flat" rules or accept the pension reduction.
Be generous, but be calculated. Don't let a gift today ruin your income security for the next half-decade.
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