Gifting, Granny Flats & Funeral Expenses

The Gifting rules are:

> there is an allowable gifting amount or ‘free area’ for a single person or a couple of $10,000 in a single financial year, and

> there is an allowable gifting amount or ‘free area’ for a single person or a couple of $30,000 over a five year rolling period.  (The rolling 5 year period is the current financial year plus the previous 4 financial years.)

Any asset or amount that you gift over and above either the $10,000 in a single year free area or the $30,000 five year free area is treated as a gift or deprived asset for five years from the date of disposal.

Part of the amount that you disposed of to acquire a “Granny Flat” interest could also be deemed to be deprived or gifted. Refer to the “Granny Flat” links below for a full discussion of the calculations involved.

Gifts are:

> included in your assets until the fifth anniversary of the date of the gift, and

> deemed to earn income in the same way as financial assets.

Any amounts you disposed of or gifted in the five years immediately before you were granted a payment can also be considered.

For more information on asset deprivation (gifting) refer to the links below.

Burial plots and some prepaid funeral expenses and funeral bonds are not included in your assessable assets for Centrelink asset test purposes.
           

* Maximum total amounts invested

The above limits apply to a single pensioner and each member of a couple.

Changes from 1 January 2008
> Two funeral bonds can be exempt, even if you have three or more, whereas previously you could have one exempt and even then only if it was your sole funeral bond.

For details about this refer to the link below entitled ‘Funeral Expenses – Preparations You Can Make’.

If your entry contribution to a retirement village or granny flat is equal to or less than the extra allowable amount at the time of entry, you are assessed as a non-homeowner for Centrelink purposes.  Your entry contribution will count as an asset for the assets test.  You may qualify for rent assistance.  The extra allowable amount is the difference between the non-homeowner and homeowner assets test thresholds at the time the entry contribution is paid.