How much can I gift my children while on the pension? (2024)

My sons need assistance because of a large legal debt incurred when a will was contested. How much can I gift them? I am on a single-part pension.

For pension purposes, you are allowed to give a total of $10,000 every financial year with a total of $30,000 over five years. Gifts exceeding that will be counted as an asset and subject to deeming under the income test for five years from the date of the gift. After five years they would cease to exist for Centrelink purposes.

Just understand the difference between a loan and a gift – if you make a loan it will stay for Centrelink purposes as long as it exists, but if it was a gift exceeding the limits it will vanish for Centrelink purposes in five years.

Disposing of money in either way should not have an immediate adverse effect on your pension because Centrelink will assume your financial position is unchanged. Therefore, your pension will be unchanged but the assets you have as your own personal financial resources will be depleted by the amount of that gift.

I was fortunate enough to buy 3000 shares in CSL when they listed for $2.40. As you know the price has grown dramatically and is now $280 a share. It’s a great outcome but CSL is now 30 per cent of my portfolio which is not an ideal situation according to the experts. Are there any strategies I could use to reduce my exposure? I am aware of the impact of CGT. Are there any other structures I could use? I’m 62 and earn $90,000 a year.

Loading

You can’t move assets to any other structure without triggering a CGT event. What you could do is sell in small parcels and offset any capital gain with a $27,500 concessional contribution to superannuation. On your present salary, your employer superannuation will be around $9000 a year which gives you space to contribute an extra $18,500 as a tax-deductible contribution.

Your taxable profit would be around $278 a share which would reduce to $139 application of the 50 per cent discount. Therefore, if you sold 134 shares, you would net around $37,000 which would boost your superannuation as well as reweighting your portfolio.

But just bear in mind there is a risk called reinvestment risk which happens when you sell an asset and then can’t find an asset of equivalent value to replace what you have sold. CSL appears to have good long-term prospects, and you need to take that into account when deciding what to do.

Thanks for your continuing great information. I have a query but can’t seem to find the answer anywhere. I note the home owner’s couple pension is being increased to $802 each per fortnight after 30 June. Does this include the supplement for energy and pension supplement or is that added to the $802?

The $802 per fortnight each includes the pension, pension supplement and clean energy supplement.

My super is in accumulation and I making lump sum withdrawals from time to time for day-to-day living/lifestyle expenses. My balance is around $2 million. If my balance falls below the $1.9 million limit, and I receive a windfall gain such as an inheritance, can I make further non-concessional contributions to increase the balance to $1.9 million? I am 65 and retired.

Your total super balance (TSB) at the end of the previous financial year will determine your ability to make after-tax contributions to super. The TSB includes money in both accumulation and pension phases.

If you are making lump sum withdrawals from time to time from your super accumulation, and if the total super balance at June 30, 2023, is below $1.9 million, then you may be able to make after-tax contributions to super in the 2023-24 financial year. If you do receive a windfall gain in the future, I suggest you get advice at that time to determine if you can contribute.

Noel Whittaker is the author of Retirement Made Simple and other books on personal finance. Email: noel@noelwhittaker.com.au

• Advice given in this article is general in nature and is not intended to influence readers’ decisions about investing or financial products. They should always seek their own professional advice that takes into account their own personal circ*mstances before making any financial decisions.

For expert tips on how to save, invest and make the most of your money, delivered to your inbox every Sunday, sign up for our Real Money newsletter here.