The income and assets tests affect a client's ability to make regular financial gifts, which would reduce their assessable assets and increase the amount of pension they receive. Gifts beyond allowable limits are considered 'deprived assets' which are asset tested for five years and are subject to the deeming rules under the income test.
Two tests apply when gifting assets:
- clients may gift up to $10,000 per financial year, and
- subject to a limit of $30,000 over a rolling five-year period.
The extent to which Centrelink will treat a gift as a deprived asset depends on the value of financial gifts made in any one financial year (rule 1) plus the value of any financial gifts made in the previous four financial years (rule 2). To prevent double counting, the rules then make an adjustment for financial gifts that are already being treated as a deprived asset.
For example, if a client gifted $10,000 a year for the next three years (1 July 2015 to 30 June 2018) they would be unable to gift anything for the two years after 1 July 2017 without deprivation occurring. This is because they will have reached their gifting limit under rule 2.
Last modified: Tuesday, May 2, 2017