There seems an eternal thirst for information on giving away money!
Specifically, it relates to retired parents or grandparents receiving a Centrelink benefit and feeling like giving a little (or big) something to their children or grandchildren.
If you’re in that group, just hold your horses before you go handing over any cash, cars or country estates.
There are rules you’ll need to be mindful of if you want to maintain your Centrelink payment.
If not, well you can gift any amount you see fit, but it may impact your payment.
Staying under the prescribed gifting limits though, will allow you to cull your asset base slightly, without any payment reduction.
Essentially, gifting is the term given when you or your partner give away assets or transfer them for less than market value and don’t receive adequate compensation.
Pensioners, as a single person or couple, are allowed to gift a maximum of $10,000 in a financial year.
However, this one year rule exists within the limits of a five year rule.
Pensioners, as a single person or couple, are allowed to gift a maximum of $30,000 over a rolling five year period, being the current financial year with the combination of the previous four.
Gifts above these amounts will be considered as deprived assets.
This essentially means they will remain as part of your assessable asset base and be deemed to earn income until the five year anniversary of when the asset was gifted.
It’s also important to remember this rule also applies to five years previous to receiving any benefit.
Reducing the asset base to sneak in for a pension is clearly a draw, but there’s no way of doing it.
So any ideas of shifting assets to the kids or grandkids ahead of time in the hope of securing a pension will be in vain.
Like everything with accessing and maintaining Centrelink payments – keep abreast of the relevant rules or seek professional advice.
Peter Mancell is a director of Mancell Financial Group and FYG Planners AFSL/ACL 224543, www.mfg.com.au This information is general in nature and readers should seek professional advice specific to their circumstances. Looking for the top financial adviser in Australia? We think we’re it.
