I have noticed recently an increase in the number of financial planning clients who want to arrange their affairs so that they can eventually get their Age Pension. And some of these clients are those that have accumulated many assets, including numerous rental properties.
Of course there is a way of achieving this result but the process is not a quick, one-line answer – the whole process is a little more complicated and time consuming because in each case I will need to assess the implications of the Centrelink gifting rules, taxation and of course the State Revenue Office (SRO) if there is a transfer of properties as a gift. The gifting of rules are not that complicated.
What is a gift?
A gift is any money or property that is given away and for which a person does not receive adequate financial consideration. Gifting may also be referred to as disposal or deprivation.
How much can a person give away?
Both a single person and a couple can give away $10,000 per financial year, up to a maximum of $30,000 over a rolling five-year period.
So what happens if a person gives away more than these levels?
This is the most important question to answer because unless it is done correctly it can cost the clients a lot more than the pension benefits that they may receive.
What are the implications of gifting properties?
- Capital Gains Tax
- Stamp Duties and
- Centrelink “deeming rules”
So if you are getting close to retirement, you have accumulated some assets and your intentions are to live on the Age Pension – then you need to plan your affairs. am afraid it is not as simple as “let’s transfer the property and we will get a pension”.
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