Rules apply to gifting in superannuation

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In a recent webinar, Manzanero-Caruana said with more clients approaching pension age while simultaneously supporting adult children, practitioners say misunderstandings about gifting limits, informal family arrangements and transfers to trusts are creating avoidable compliance risks and long‑term impacts on retirement adequacy.

“Gifting is where the person transfers assets or it could also be a transfer of income to someone other than their spouse, and don’t receive adequate consideration for it. Clients can gift up to a certain amount, but anything over a certain limit, probation rules will apply,” she said.

“They will call that amount a deprived asset, and deprived assets are assessed for five years as an asset and deemed for the income test. So why do the probation rules apply? It is expected that we rely on our own resources for day-to-day needs before calling on the taxpayers for income support.”

Manzanero-Caruana said gifting is quite common, and from the cases she has seen it usually involves parents giving to their children.

“But before gifting, it’s important to ensure that clients have funds for retirement and for aged care needs. I think it’s okay to gift, but if you’re on the age pension, generally you have limited resources, or it is a risk that you may not have enough for your retirement or aged care needs,” she said.

“There’s also sometimes an understanding that a gift could be paid back. I had a case where they said, ‘Well, we’re going to give, but our daughter is going to give back certain amounts every year’. The thing is, if the gift is informal, and there is no legal agreement, there is no control over the money that you’ve given away.”

She added that if the person who received the gift becomes bankrupt, or there is a relationship breakdown, there may be no way to recover the gift.

“You can gift up to a certain limit, and there are two limits that apply at the same time. The same limits apply to both singles and couples, so that means couples will share the gifting limit,” Manzanero-Caruana said.

“The gifting limit is $10,000 per financial year, and there is also a second limit, which is $30,000 over five rolling financial years. So, when your client gifts it’s important to apply both these tests. Did the client give more than $10,000 a year, and did a client also give more than $30,000 over five rolling financial years?”

She said, for example, that if a client gifts $10,000 a year, on the fourth $10,000 gift, that would not meet the $30,000 limit, and would be a deprived asset.

“It’s going to be assessed for five years from the time of gifting and it’s going to be deemed for the asset test.”

Considering how a client may gift, she said they may choose to give $10,000 per year for three consecutive years, then stop for two years. Alternatively, they could give $6000 every financial year.

“For larger sums, and I see this a lot when a client approaches age pension age, they might give large lump sums, ideally more than five years before they reach age pension age, or they might give before they start,” she added.

“They might gift a large amount in order to reduce their age care costs, but then most of them would already be pension age, and they would still have deprived assets.”

For transfers to trusts and companies there are Centrelink implications which need to be considered, Manzanero-Caruana said.

“If Centrelink thinks you’re the source and you still control the trust or company, it’s not gifting,” she explained.

She continued: “They’ll attribute assets to you, the assets and income that those assets in the trust or company generate. However, gifting rules can apply if you transfer assets to a trust or company for less than market value, and you don’t benefit from it, you’re not a shareholder of the company.”

“It’s important to figure out whether you want to gift, you want to retain control of the trust or the company, because that’s going to impact your Centrelink,” she said.

“There’s also another option that I think, instead of gifting, would you loan it? Loans will be assessed as an asset, also deemed for the income test and you can still ask for it to be paid back. When you die, you can still give the loan, you can say you forgive the loan in your will.”

Keeli Cambourne
June 23, 2026
smsfadviser.com