What are gifting limits?
THE gifting rules applied by Centrelink for benefit payments do not prevent a person from making a gift to another person. Rather, they cap the amount by which a gift will reduce a person's assessable income and assets for means testing purposes.
There are two gifting limits which apply to a single person or to the combined amounts gifted by a couple:
-- up to $10,000 each financial year, and
-- a limit of $30,000 over a five financial year rolling period.
The $10,000 and $30,000 limits apply together. Although people can continue to gift assets of up to $10,000 per financial year without penalty, they need to take care not to exceed the gifting free limit of $30,000 in a rolling five-year period.
Example : Ken, a single pensioner would like to financially help his adult daughter and grandson. His plan for gifting is $5000 each year for four consecutive financial years.
With this gifting plan, Ken has not exceeded either gifting rule.
This is because he has kept under the $10,000 in a single year rule and also within the $30,000 per rolling five-year period. In fact, Ken could have gifted $6,000 per financial year over this five year period and not be caught under either rule.
This results in his assessable financial assets falling by $5,000 per annum or $25,000 over the five-year period, which may also increase his Centrelink entitlements.