Australia · Explainer
Gifting and deprivation
$10,000 in a financial year, $30,000 across 5 years — and both are per person or per couple, not per recipient. Everything above them is assessed as though the client still holds it. Here are the two limits, the order they apply in, and what deprivation actually costs.
What the rules do
Clients can give money away. The means tests simply decline to notice beyond a point: $10,000 in a financial year, and $30,000 across the current year and the four before it. Anything above either limit is a deprived asset — assessed for 5 years from the date of the gift, as though it had never left.
Gifting is not limited to cash. Transferring an asset for less than its market value is a gift of the difference, and so is forgiving a loan. The test is whether the client received adequate consideration, not whether the transaction was called a gift.
Key figures
- Gifting limit — per financial year
- $10,000
- Gifting limit — rolling five years
- $30,000
- Deprived asset — assessment period
- 5 years
- Assets test taper rate
- $3 per fortnight per $1,000
Two limits, applied in order
The order of operations
- 1. Apply the $10,000 limit to each financial year on its own. Anything above it in that year is deprived immediately.
- 2. Apply the $30,000 limit across the window, oldest year first. Once the allowance is spent, later gifts are deprived even where they are within the annual limit.
- 3. Every deprived amount stays in the assets test, and is deemed under the income test, for 5 years from the date of that gift.
Step two is why the annual limit cannot simply be used five times over. $50,000 of gifts spread evenly across the window is $20,000 more than the five-year limit allows, and the excess lands in the most recent years — the ones the client is least likely to have forgotten to mention.
Worked example — $10,000 a year, every year
The most common pattern, and the one clients are most confident about. Every figure is computed by the calculator below.
| Financial year | Gifted | Exempt | Deprived |
|---|---|---|---|
| 2022-23 | $10,000 | $10,000 | $0 |
| 2023-24 | $10,000 | $10,000 | $0 |
| 2024-25 | $10,000 | $10,000 | $0 |
| 2025-26 | $10,000 | $0 | $10,000 |
| 2026-27 Current year | $10,000 | $0 | $10,000 |
| Across the window | $50,000 | $30,000 | $20,000 |
The client gave away $50,000 and is assessed on $20,000 of it. For an asset-tested client that costs $60 a fortnight of pension — $3 per fortnight per $1,000 applied to money they no longer have. For an income-tested client the same amount is deemed, adding $250 a year of assessable income at the 1.25% rate.
A single larger gift behaves differently again. $50,000 given away in one year is $40,000 deprived on the spot under the annual limit — but it leaves $20,000 of the five-year allowance intact, so the client can still gift $10,000 in the current year with no further consequence.
Gifting calculator
Everything given away in the last 5 years, by financial year. One figure per year for the client or the couple — not one per recipient, and not one each. It opens on the pattern that catches people: $10,000 a year, every year.
Assessed as a deprived asset
$20,000
$50,000 gifted across the window, of which $30,000 is exempt. The rest stays in the assets test, and is deemed under the income test, for 5 years from each gift.
Nothing further can be gifted in 2026-27 without it being assessed as deprived.
| Year | Gifted | Exempt | Deprived |
|---|---|---|---|
| 2022-23 | $10,000 | $10,000 | $0 |
| 2023-24 | $10,000 | $10,000 | $0 |
| 2024-25 | $10,000 | $10,000 | $0 |
| 2025-26 | $10,000 | $0 | $10,000 |
| 2026-27 | $10,000 | $0 | $10,000 |
| Across the window | $50,000 | $30,000 | $20,000 |
Simplified illustration for education — not advice. The $10,000 and $30,000 limits are per person or per couple, and the five-year allowance is consumed oldest first.
Practical points
- Deprivation is assessed twice over. The amount sits in the assets test and is deemed under the income test. Which of the two actually costs the client depends on which test is producing the lower rate of pension.
- Ask about the last 5 years, not the last year. The window looks back across the current financial year and the four before it, so a gift made well before the client became a client is still in scope. It is the question most fact-finds ask too narrowly.
- Selling cheaply to family is gifting. Transferring a property or a car to a child below market value is a gift of the difference. So is forgiving a loan the client had recorded as an asset — the loan leaves the assets test and the deprived amount replaces it, for 5 years.
- Neither limit is indexed. $10,000 and $30,000 are fixed in nominal terms, so they buy less generosity every year while the thresholds around them index. A rule that has not moved is still a rule that is quietly tightening.
- The cost is nil where no threshold is in play. A client comfortably below the full-pension threshold, or well above the cut-off with no entitlement to lose, can gift without any pension consequence. Deprivation is only expensive in the band between them.
Questions we get asked
- Is the $10,000 limit per recipient?
- No — and this is the misunderstanding that does the most damage. It is per person or per couple. A client with four children who gives each of them $10,000 in a year has gifted $40,000, of which $30,000 is assessed as deprived. A couple have one limit between them, not one each.
- Can a client gift $10,000 every year indefinitely?
- Not without deprivation. The second limit is $30,000 across the current financial year and the four before it, and the allowance is consumed oldest first. $10,000 a year for 5 years is $50,000 gifted and $20,000 assessed as deprived — the last two years of the pattern fall entirely outside the limits.
- What happens to an amount that is over the limits?
- It is treated as a deprived asset: it stays in the assets test, and is deemed under the income test, for 5 years from the date of the gift. The client no longer has the money, and Services Australia continues to assess it as though they do. After 5 years it drops out of both tests.
- Does gifting only mean cash?
- No. Any asset transferred without adequate consideration is a gift, and selling an asset for less than its market value is a gift of the difference. Forgiving a loan, transferring a property to a child at a discount and putting money into a family trust the client does not control are all capable of being deprivation.
- Do gifts made before Age Pension age count?
- Yes, where they fall inside the 5 years window. A gift made before a client claims the pension is assessed on the same basis once they do — so the 5 years before a client is likely to claim is the period where gifting advice matters most.
- Is gifting ever worth doing anyway?
- Sometimes. Deprivation costs an asset-tested client the taper on the deprived amount — $3 per fortnight per $1,000 — and an income-tested client the deemed income on it. Where the client is well below both thresholds, or well above the cut-off with no entitlement to lose, a gift can be made without any pension consequence at all. The cost is only real where a threshold is in play.
Sources
Sourced from the references below. The limits, the taper and the deeming rates used above are read from the same reference file as the Age Pension rates and thresholds page.
Related
- Age Pension rates and thresholds — the thresholds a deprived asset is measured against.
- Deeming explained — what the income test does with an amount the client no longer holds.
- Commonwealth Seniors Health Card — income tested only, so gifting to reduce assets does nothing for it.
- Downsizer contributions — the other conversation that follows a family home being sold.
- All knowledge-hub references