What you need to know about gifting money to your kids

Gifting money to your children or grandchildren represents more than just financial assistance – it's an opportunity to provide meaningful support and lessons about money.

With rising housing costs and many other economic uncertainties in 2025, many parents and grandparents are looking for the most effective ways to help their loved ones financially.

However, gifting comes with important considerations, especially if you're receiving the Age Pension or other Centrelink benefits. Knowing the rules around gifting can help you provide support and assistance to your kids or grandkids, while avoiding unexpected consequences.

There are a few reasons why you might give money to your children or grandchildren:

• Home deposit: Help with the increasingly challenging task of obtaining a home loan.
• Educational support: Contribute towards or pay school or university fees, training costs.
• Debt reduction: Help manage or eliminate high-interest debts.
• Emergencies: Provide a financial safety net during unexpected life challenges.
• Pre-retirement planning: Strategically increase pension payments by endowing assets.
• Tax reasons: Transfer wealth with minimal tax obligations – when done correctly.

Should you gift money to your kids?

The Australian Taxation Office (ATO) defines a gift as a voluntary transfer of money or property in which the owner does not expect anything in return, and does not materially benefit.

Some common examples include:

• Gifting money for a home loan deposit
• Paying rent or a bond for your kids housing
• Paying for your child's engagement party or wedding
• Gifting shares or investments

While there's typically no limits on gifting money to family members, specific rules and reporting requirements apply if you receive government benefit. See below for details:

The $10K and $30K rule

• You can gift up to $10,000 in cash and assets per financial year
• A maximum of $30,000 in cash and assets over a rolling five-year period

These limits apply to singles and couples combined. Exceeding these thresholds affects how Centrelink calculates your assets and income for benefit and payment purposes.

Reporting requirements

If you receive Centrelink payments, you must:

1. Report any gifts within 14 days of the transaction
2. Provide documentation of the gift amount and recipient
3. Update your asset and income information accordingly

Centrelink tracks gifting on a rolling five-year basis to determine compliance with gifting limits.

When you gift beyond the allowed limits:

• The excess amount remains counted in your asset test for five years
• Centrelink applies deeming rules to calculate income from this "deprived asset"
• Your pension or benefit payments may be reduced accordingly
• The impact continues for the full five-year assessment period.

Example scenario

Margaret, 68, decides to gift $20,000 to her daughter to help with a house deposit.

Under Centrelink’s gifting rules, you can only give away up to $10,000 per financial year (and no more than $30,000 over five years) without it affecting your pension. Because Margaret has exceeded the annual limit by $10,000, Centrelink continues to treat that excess amount as part of her assessable assets for the next five years.

As a result, Margaret’s Age Pension may be reduced. Based on the current asset test rules, every $1,000 over the threshold trims her payment by about $3 per fortnight. In Margaret’s case, the $10,000 excess could mean around less $30 per fortnight – or $780 a year – for up to five years.

Generally, cash gifts from relatives don't count as assessable income and don't need to be declared. However, any interest earned on gifted money must be declared.

In any circumstance, it’s best to consult with a financial advisor or accountant first before you start gifting money to your children. They can provide a tailored answer based on your finances.