Most gifting of a substantial nature is from retired parents or grandparents to their children or grandchildren.
And the issue that raises the most questions when gifting, is the issue of tax.
Specifically, whether the giver, or receiver is liable for tax on the gift.
When dealing only with money, there is no tax liability on gifting.
So if you’re feeling comfortable enough in retirement, feel free to gift any amount you see fit.
Don’t be too generous though, you still have to enjoy retirement and your children or grandchildren may not have the means to re-gift money back to you if required.
When transferring assets the situation becomes slightly more complicated.
There’s nothing to stop you transferring an asset, such as a shack, for a nominal sum, but stamp duty and capital gains tax (CGT) are still calculated on the current market value of the property.
Another option is to bequeath a property in a Will; in this situation there is no stamp duty payable and GCT is deferred until there is a sale.
There are other considerations when bequeathing property in a Will.
These relate to bequeathing a family home compared to an investment/holiday property.
If the family home is left to one child and the investment/holiday property is left to another child, the CGT treatment may have an impact on the recipient of the investment/holiday property.
Then there’s gifting to one child as an early inheritance, possibly to help with financial difficulties.
This should be documented because without a Will directing the balance of the estate to other children, there could be problems if the first child decides to challenge the Will.
Next week I’ll discuss gifting while receiving Centrelink benefits.
Peter Mancell is a director of Mancell Financial Group and FYG Planners AFSL / ACL 224543. This information is general in nature and readers should seek professional advice specific to their circumstances. Need help with your financial your financial future, we think we’re Australia’s top financial adviser.
