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Nick Bruining Q+A: How to keep the peace and send you kids down the aisle with a $10,000 gift

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Nick BruiningThe West Australian
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Can I give money to my children for their weddings without jeopardising my full age pension . . . and peace among the family?
Camera IconCan I give money to my children for their weddings without jeopardising my full age pension . . . and peace among the family? Credit: StockSnap/Pixabay (user StockSnap)

Question

My eldest son is about to get married. To help with the cost of the wedding, I plan to give him $10,000. I also have two other children who are not yet married and want to make sure they don’t miss out, too.

But I don’t want to mess up my own finances, particularly my full Centrelink age pension. Can you make any suggestions about how to make the contribution to the wedding without jeopardising my pension and maintain peace in my family?

Answer

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There are a couple of solutions, but let’s deal with the common misunderstanding surrounding gifting.

There are no laws that prevent you from doing what you like with your money. The only issue is to consider the Centrelink deprivation rules which basically prevent you from giving things away in order to get more money from “the system”.

You can reduce your assets by up to $10,000 a year with a maximum of $30,000 over a rolling five-year period. That figure is a total and the $10,000 limit applies to a single or a pensioner couple. If you go over these limits, Centrelink will simply include the excess amount under the means-testing system for a maximum of five years from the date of the deprivation.

That means, for example, if you gave your kids a total of $100,000 today — August 8, 2022 — your assets will be decreased by $10,000 but the remaining $90,000 will be included under the income and asset means tests until August 8, 2027. From that date, the $90,000 will effectively drop off.

Importantly, however, these issues are normally only going to affect someone who is ineligible or only receives a part-pension from Centrelink because of means testing.

As you receive a full pension, and assuming you will be gifting something that Centrelink is already assessing, making the gift to your son will not affect your pension at all.

As for maintaining the peace, you could give your other children an equivalent amount now. In your case, your pension will stay the same, but you have lost the use of the full $30,000.

For someone who the gifting rules might affect, you may decide to stage the remaining two amounts of $10,000 by delaying the gifts. You could give the two remaining children $5000 each on July 1 next year and a further $5000 each on July 1, 2024.

Finally, just let the other children know that there is $10,000 available for them, too. Whether they decide to marry is probably irrelevant if you make it clear the money is there for “that kind of thing” if they need it.

Got a question for Nick? Email yourmoney@thewest.com.au or write to us at Your Money, GPO Box D162, Perth WA, 6840.

Nick Bruining is an independent financial adviser.

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