The Age Pension 5-Year Gifting Rule

Centrelink has specific rules about gifting money or assets when you're receiving Age Pension. Gift too much, and they'll treat the excess as a "deprived asset," which counts against you in the asset and income tests.

The limits are $10,000 in any financial year, and $30,000 over a rolling 5-year period. These limits apply whether you're single or part of a couple.

The Rules

Limit Type	Amount	Applies To
Annual limit	$10,000	Any single financial year
Rolling 5-year limit	$30,000	Total over any 5-year period
Deprivation period	5 years	From date of gift

The limits are the same for singles and couples. Unlike many Age Pension thresholds, there's no couple bonus; a couple is subject to the same $10K/$30K limits as an individual.

What Counts as a Gift?

A gift is when you transfer money or assets to someone else without receiving full value in return. This includes:

• Giving cash to family or friends
• Transferring property below market value (e.g., selling a $500K house to your child for $300K = $200K gift)
• Forgiving a debt (if you lend money and then cancel the debt)
• Paying off someone else's debt (e.g., paying off your child's mortgage)
• Gifting shares, investments, or other assets

Gifts don't include:

• Reasonable living expenses (e.g., paying for groceries if a family member lives with you)
• Small gifts on special occasions (birthday, Christmas), as long as they're reasonable
• Donations to charities (assessed separately, generally not counted as deprivation)

The 5-Year Deprivation Period

If you exceed the gifting limits, the excess is treated as a "deprived asset." Centrelink continues to assess this amount as if you still own it for 5 years from the date of the gift.

During this 5-year period:

• The deprived amount counts in the asset test (reduces your pension)
• The deprived amount generates deemed income in the income test (further reduces your pension)

After 5 years, the deprivation ends and the gift is no longer assessed.

Example: Gifting $50,000

You gift $50,000 to your daughter in one financial year.

• Allowable: $10,000 (within annual limit)
• Deprived asset: $40,000 (excess above limit)

For the next 5 years, Centrelink treats you as if you still have that $40,000:

• Asset test: $40,000 added to your assessable assets
• Income test: $40,000 generates deemed income (~$1,700/year at current rates)

Your Age Pension is reduced accordingly. After 5 years, the $40,000 stops being assessed.

How Deprived Assets Affect Your Pension

Deprived assets are assessed just like any other financial asset:

• Asset test: The deprived amount is added to your total assets. If this pushes you above the full pension threshold, your pension is reduced by $78 per year for every $1,000 over (the 7.8% taper rate).
• Income test: The deprived amount generates deemed income (0.25% / 4.25% tiered rates), which is added to your assessable income and tapered at 50 cents per dollar above the income free threshold.

This means you can actually be worse off than if you'd kept the money. You no longer have the asset, but you're still penalized as if you do.

Couples and Gifting

For couples, the gifting limits apply to the couple as a unit, not per person. A couple can gift $10,000/year and $30,000 over 5 years combined, not $20,000/year and $60,000 over 5 years.

If one member of a couple gifts $15,000, the excess ($5,000) is treated as deprived. It doesn't matter which partner made the gift; the deprivation applies to the couple.

Timing Strategies

Spreading Gifts Over Multiple Years

To maximize gifting without deprivation, spread gifts across financial years:

• Year 1: Gift $10,000 (within limits)
• Year 2: Gift $10,000 (within limits)
• Year 3: Gift $10,000 (within limits)
• Year 4: Can't gift more (would exceed $30K rolling limit)
• Year 5: Can't gift more (would exceed $30K rolling limit)
• Year 6: Gift $10,000 (Year 1 gift now outside 5-year window)

This allows $30,000 over 5 years without deprivation, but requires careful timing.

Gifting Before Applying for Age Pension

If you gift before applying for Age Pension (or before Age Pension age, 67), the 5-year deprivation period still applies from the date of the gift. Centrelink will look back 5 years and assess any gifts made during that period when you apply.

Selling Your Home

Selling your family home and giving proceeds to family can trigger gifting rules. The family home is exempt from the Age Pension asset test while you live in it, but once you sell, the proceeds become assessable (unless you use them to buy another home within 12 months).

If you sell your $900,000 home and gift $500,000 to your children:

• Allowable: $10,000 (or up to $30K over 5 years)
• Deprived: $490,000 (excess, assessed for 5 years)

This would likely eliminate your Age Pension entirely during the deprivation period due to the asset and income test impacts.

Selling Below Market Value

Selling an asset to family for less than market value is treated as a part-gift:

Example: You sell a $400,000 investment property to your son for $250,000.

• Market value: $400,000
• Amount received: $250,000
• Gift (deprivation): $150,000

Allowable: $10,000. Deprived: $140,000, assessed for 5 years.

Charitable Donations

Donations to registered charities are generally exempt from gifting rules and deprivation. However, Centrelink may review large or unusual donations to ensure they're genuine charitable gifts and not disguised gifts to family.

Further Reading

• Age Pension Asset Test 2025: Complete Guide
• Homeowner vs Non-Homeowner Asset Test
• How Centrelink Deeming Works