How do we gift money to our grandson without hurting our pension?

My wife and I are on a part age pension. Our total assessable assets are $490,000 – this includes $30,000 in household contents and $460,000 in investments, superannuation and bank accounts. We’d like to give $100,000 to our grandson to help him buy a home. Is this allowed, and will it affect our pension?

These types of questions are becoming increasingly common. There are no restrictions in Australia on giving money, and there is no gift tax or gift duty. Furthermore, such a gift does not have an immediate effect on your pension.

Questions on gifting are becoming increasingly common, however, the rules are actually quite straightforward.Credit: Dominic Lorrimer

Gifts exceeding the limits of $10,000 per financial year and $30,000 over five financial years are subject to the deprivation rules – this means Centrelink will assume you still own the asset for five years even though you no longer do. However, there are strategies to optimise the outcome.

You could give $10,000 to your grandchild before June 30 and another $10,000 just afterwards. This would reduce your assessable assets to $470,000, allowing you to receive the full pension.

The remaining $80,000 could be a straight gift, which will no longer count as an assessable asset after five years.

I have seen your advice to value household effects at garage sale prices for the purpose of assessing the value of assets when applying for an age pension. Does that apply to antiques? How should we go about valuing antiques that have been in the family for many years?

Regan Welburn of My Pension Manager advises that antiques should be valued by the customer at their current market value. Since this can be subjective, one approach is to consider how much you would be willing to sell the item for today, or how much you would insure it for.

If there is uncertainty, a professional valuation may be worthwhile. This not only helps establish a fair market value for pension purposes but also provides an accurate figure for insurance coverage.

I recently read your article on clearance certificates. You state “the process is free”, however, I logged into the ATO yesterday, and it says the cost is $99 for each certificate. My wife and I both need one, so this makes the cost $198. Can you shed any light on this?

Applying for a certificate from the ATO is free. However, if you type “foreign resident capital gains withholding” into a search engine, some of the top results are commercial operators who will “assist” you with your application for a fee.

The relevant ATO weblink for the form is here. That’s the one that should be used if the taxpayers don’t wish to pay.

In 2002, my wife and I emigrated from South Africa to Perth with our two children. In 2010, we started building our second home, and in October 2012 we moved into it. At the same time, our son was getting married. Wanting to give the newlyweds a good start in life, we allowed them to stay in our first home, covering the rates, service fees and maintenance while they only paid the utility bills, as my wife and I both had well-paying jobs.

They have lived there since but will soon be moving into their newly built home. I plan to retire in a year or so, and my wife is currently working part-time.

A few months ago we consulted a financial planner, who recommended in the statement of advice that we each make a $300,000 downsizer contribution into our respective super funds when we sell our first home. However, when we reviewed this with our accountant he suggested we seek clarity on whether we are eligible for the downsizer contribution, as this property has not been our main residence since 2012. Are we eligible to make the downsizer contribution under these circumstances?

One of the eligibility criteria to make downsizer contributions is that the property must have been your main residence at some point during your ownership period for the purposes of the main residence CGT exemption.

It does not need to be your main residence at the time of sale, so as long as a partial exemption under the main residence CGT provisions applies, this requirement is met.

Noel Whittaker is the author of Retirement Made Simple and other books on personal finance. Questions to: [e-mail]

• 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 circumstances before making any financial decisions.

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