Gifting Money or Assets: How to Do It Right for Tax and Wealth Planning

What You Need to Know Before You Give

While Australia has no formal gift tax, gifting can still trigger capital gains tax, impact Centrelink entitlements, and affect long-term wealth planning. 

Many individuals and families want to support loved ones through gifts, whether helping a child buy their first home, transferring assets to the next generation, or making charitable contributions. Before acting, it’s essential to understand Australia’s rules around gifting, the broader context of wealth transfer, and why financial advice is invaluable. While Australia does not have a specific gift tax, gifting is not always free from tax consequences.

What to Watch Out For

• Cash gifts generally have no immediate tax impact for the giver or recipient, though individual situations may vary.
• Gifts of assets such as property, shares, crypto, recreational assets or investments may trigger capital gains tax (CGT) because the ATO treats the transfer as if sold at market value.
• Centrelink means tests can be affected by gifting. Exceeding limits may reduce entitlements, particularly close to pension age.
• Interest earned on gifted funds is taxable to the recipient.

Gifting Assets

Gifting assets can trigger significant tax implications. Under ATO rules, a gifted asset is treated as though sold at market value, meaning you may incur CGT on the gain since purchase. Jewellery, artwork, collectibles and other valuable items may also attract CGT if valued over certain thresholds. Personal use assets under $10,000 are generally exempt from CGT.

Centrelink’s Five-Year Rule Before Pension Age

Any gifts made within the five years prior to applying for the Age Pension are assessed under Centrelink’s deprivation rules. Amounts gifted beyond:

• $10,000 per financial year, or
• $30,000 over a rolling five-year period

the excess amount will continue to be assessed as if you still own it for five full years from the date of the gift.Giving away too much too close to pension age can unintentionally reduce your future pension entitlements.

Gifting Overseas

International gifting requires extra care. While genuine overseas gifts received are usually not taxable, the ATO expects proper documentation. Gifts involving foreign trusts or non-cash assets can trigger complex tax outcomes, including the taxation of capital received from certain foreign structures.

Top Four Reasons to Seek Professional Advice Before Gifting

1. Tax Impact Analysis
   Understand CGT, income tax consequences and implications for means-tested benefits.
2. Structuring for Protection
   Trusts and other structures can help reduce tax, protect assets and manage distribution outcomes.
3. Documentation & Compliance
   Proper documentation protects you from ATO scrutiny and reduces the risk of future disputes.
4. Holistic Planning
   Ensure your gifting aligns with retirement needs, super planning, estate strategies and long-term wealth goals.

Generosity underpins many gifting decisions, but without planning, well-meant gifts may lead to tax issues, legal disagreements, reduced entitlements, or erosion of wealth. Whether you're helping children onto the property ladder or planning future wealth transfer, professional advice makes all the difference.

Talk to Us About Your Gifting and Wealth Legacy Plans

At Cashflow Financial, we tailor advice on gifting, tax planning, trusts, estate structures and more. Let us help you make informed decisions that support your financial wellbeing and protect your legacy.

Get in touch. Financial peace of mind starts with a conversation.