It’s one of the most common questions I get – usually from people who want to help their family, but don’t want to accidentally create problems for themselves.
And they’re right to ask – because what seems like a pretty straightforward situation (gifting money to loved ones) can create a real headache and serious financial consequences down the track if not managed correctly.
I recently sat down to chat this through with my co-host Nathan Fradley, fellow independent financial adviser, on Episode 69 of our Weaving Gold podcast: Can I gift money without affecting my pension?
It’s natural (and lovely) to want to help your children and grandchildren get ahead financially, but as I explain on the podcast, a big part of my role as an adviser is helping people pause and make sure they’re looking after themselves first.
Here’s what to keep in mind before you act.
It’s your money – but it’s not always that simple
There’s a common assumption that gifting is straightforward. That you can give what you like, when you like, and that’s the end of it.
Technically, that’s true. But if you’re receiving the Age Pension, Centrelink applies rules around how those gifts are assessed.
One of the biggest misconceptions is that giving money away will improve someone’s position – when in many cases, it doesn’t. As I explained in the episode: “There’s not a limit on how much you can give. There’s just an exemption to that deprivation.”
In practical terms, you can gift up to $10,000 in a year (or $30,000 over five years) without it affecting your assessed assets. Anything above that is treated as a “deprived asset”, meaning it’s still counted as yours for five years – even though you no longer have access to it.
That five-year window is where many people get caught out.
Small decisions, big impact
When people think about gifting, they often picture large lump sums. But in reality, it’s often the smaller, more meaningful gestures that can create issues.
Helping with a wedding. Paying for flights for a family holiday. Transferring a car. Contributing to a big life moment.
These are the kinds of things people don’t always think of as “gifts” in a technical sense – but they can still be assessed that way. And they can add up more quickly than expected.
On top of that, gifting doesn’t just affect your Age Pension. It can also flow through to aged care costs later on, which is another layer many people don’t anticipate.
A gift doesn’t happen in isolation
One of the challenges with the question “Will this gift affect my pension?” is that it’s almost impossible to answer without looking at the bigger picture.
It depends on your overall financial position – your assets, your income, your stage of life, and sometimes even the position of the person receiving the gift.
As we caution in the episode: “Some things cannot be fixed or undone.”
When people make decisions based on a narrow question, without stepping back to look at the full picture, they can unintentionally create outcomes that are hard to reverse.
Generosity matters – but so does timing
I’m a big believer in the idea of giving while you’re alive.
There’s something so powerful about being able to see the impact of your support – to help your children or grandchildren in real time, and to experience that sense of legacy.
But you also need to ensure your own oxygen mask has been fitted correctly first, because once money has been given away, it’s no longer available to you – even if the system still treats it as if it is.
Thinking about gifting?
If you’re considering helping family financially, it’s worth taking a step back before you act.
Not to stop you from being generous – but to make sure that generosity is thoughtful, intentional and sustainable.
Listen to the full episode here to find out more. And if you’d like to talk through your situation, book a call.
P.S Want to know more about why I’ve been named one of the 50 most influential financial advisers in Australia? Discover more about PlanningSolo here.
