Age Pension 5-Year Gifting Rule 2025

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)

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.