Gifting Rules: Impact on Aged Care Fees and Pension
When families first start talking about aged care, “gifting” comes up quickly—often as a well-meaning suggestion from friends or relatives:
- “Just transfer the house to the kids.”
- “Move the money out of Mum’s name.”
- “Give it away so Centrelink can’t count it.”
In practice, gifting is one of the most misunderstood parts of aged care financial planning. Not because gifting is illegal (it isn’t), but because the rules are designed to stop people improving pensions or reducing aged care fees by giving assets away.
Done without planning, gifting can trigger:
- no improvement in Age Pension outcomes (because the “gift” may still be counted)
- higher aged care means-tested outcomes (because the value can be treated as a “deprived asset”)
- capital gains tax (CGT) for the giver (often based on market value)
- transfer duty (stamp duty) for the recipient (often also based on market value)
- loss of control and significant family risk if relationships change
Last updated: 20 January 2026. This article is general information only and doesn’t consider your personal circumstances. Rules and rates can change. Always confirm details with Services Australia, My Aged Care and/or the Department of Veterans’ Affairs (DVA), and seek advice before acting.
Key takeaways
- You can gift property or money in Australia, but it can trigger CGT and transfer duty even if no cash changes hands.
- For Age Pension (and many aged care assessments), you can generally gift up to $10,000 per financial year, and up to $30,000 over five financial years, with the $10,000 annual cap still applying. Amounts above the limits may be treated as deprived assets for five years.
- “Giving it away” does not automatically remove it from assessment for pensions and aged care means testing—timing and structure matter.
- Granny flat arrangements have their own rules (including review risks if you leave within five years).
- The biggest hidden cost of gifting is often family risk and loss of control, not Centrelink outcomes.
Table of contents
- Can you gift real estate in Australia?
- What counts as a “gift” (it’s broader than people think)
- How gifting affects the Age Pension (and DVA income support)
- What is a “deprived asset” and why it matters?
- How gifting can affect aged care fees
- Tax implications of gifting property (CGT + transfer duty)
- Gifting exemptions and special cases
- Granny flat arrangements and gifting rules
- Common gifting mistakes we see
- Worked example (corrected)
- Practical checklist before making a gift
- FAQs
- What to do next
Can you gift real estate in Australia?
Yes. You can legally transfer property to a family member (or anyone else) as a gift in Australia. However, once you gift an asset, you generally give up ownership and control—and that’s often the part families underestimate.
Before considering a property transfer, it’s worth asking:
- What happens if the recipient divorces, is sued, becomes bankrupt, or passes away?
- What if the relationship changes (including family conflict or elder abuse concerns)?
- Will the recipient be able to afford ongoing costs (rates, insurance, maintenance, land tax if applicable)?
- Will this create tax consequences now (or later) that are larger than any perceived benefit?
For many families, the “gift the house” idea is actually a proxy for a deeper goal—protecting the estate, helping children into housing, or planning ahead for aged care. Those goals can sometimes be achieved more safely with structured planning rather than a straight transfer.
If the family home is part of the plan, start with: The family home when moving into care.
What counts as a “gift” (it’s broader than people think)
A gift isn’t just handing over cash.
Depending on the circumstances, gifting rules can capture:
- transferring property for $0 (or less than market value)
- forgiving a loan
- selling an asset to family for less than market value
- transferring shares or investments without receiving equivalent value
That’s why “it’s not in Mum’s name anymore” can still backfire—because the assessment can focus on value transferred, not just legal ownership.
How gifting affects the Age Pension (and DVA income support)
For Age Pension and many other means-tested payments, Services Australia applies gifting “free areas”. In general:
- you can gift up to $10,000 per financial year, and
- up to $30,000 over five financial years,
- with no more than $10,000 in any single financial year,
- without it affecting your payment.
If you gift more than the free areas, the excess can be treated as a deprived asset and may continue to be assessed under the income and assets tests for a period (commonly five years from the date of gift).
If your parent receives certain DVA means-tested payments, DVA can be involved in the assessment pathway. My Aged Care notes that means assessments are generally done by Services Australia, but if you receive a means-tested payment from DVA, they will do the assessment.
If you want the full mechanics (and aged care implications), see our deeper guide: Gifting rules’ impact on aged care fees and pension.
What is a “deprived asset” and why it matters?
A “deprived asset” is essentially an amount you have given away (above allowable limits) that the system may still treat as though you effectively have it—so it can continue to affect pension outcomes.
Two points matter in real life:
- Not just cash counts. Property transfers, shares, forgiving loans, or selling something for less than market value can be treated as gifts.
- It can still be assessed even though you no longer own it. That’s the sting in most gifting strategies.
How gifting can affect aged care fees
In residential aged care, your costs can include items like a means-tested care fee and possibly accommodation costs, depending on your means assessment.
While the aged care means assessment is its own process, My Aged Care notes that information may be drawn from your Age Pension means test.
What this means in practice: if a gift is treated as assessable (for example, under deprivation rules), it can influence the numbers used to calculate your aged care contributions—particularly the means-tested care fee—during the relevant assessment period.
It’s also why “we gave it away so it shouldn’t count” often backfires: the family loses the asset, but the system can still assess the value for a period, leading to the worst of both worlds.
If you’re also weighing accommodation payment strategy at the same time, these guides help:
Tax implications of gifting property (CGT + transfer duty)
1) Capital gains tax (CGT): the market value substitution rule
Gifting property can trigger a CGT event. Importantly, if you transfer property for less than market value (including $0), the ATO may treat you as though you received market value when calculating capital gains (market value substitution).
If the property isn’t fully exempt (for example, not fully covered by the main residence exemption), a gift can create a tax bill that needs to be funded—sometimes immediately.
2) Transfer duty (stamp duty): often payable even on gifts
Separate to CGT, states and territories apply transfer duty (stamp duty) on property transfers. Even if the property is a gift, duty can still apply, usually based on dutiable value (often market value). Rules vary by state, so confirm directly with your state revenue office (or your conveyancer) before signing anything.
Gifting exemptions and special cases
Gifts between spouses
Transfers between spouses/de facto partners may not create the “benefit” people expect for pensions or aged care fees, because assessments often consider a couple’s combined position. However, spouse transfers can still have state duty, legal, and estate implications—so treat it as a technical decision, not a shortcut.
Special Disability Trusts (SDTs)
Special Disability Trusts can have a large gifting concession, subject to strict eligibility rules and conditions. SDTs are specialist structures and should be set up with legal and financial advice.
Granny flat arrangements and gifting rules
“Granny flat” is often misunderstood. It’s not about the building—it’s about the legal interest created when an older person pays (money/assets) in exchange for the right to live somewhere for life.
Services Australia explains how granny flat interests are assessed and notes that if you leave within 5 years, they may review the arrangement; if the reason for leaving was something you could have expected when you created it, gifting rules may apply.
If your family is considering this type of arrangement, read our dedicated article: How granny flat arrangements affect aged care and the age pension.
Common gifting mistakes we see
1) “Just transfer the house” without understanding tax and duty
Many families don’t realise a gift can still trigger CGT based on market value and duty based on market value.
2) Leaving it too late
Gifting close to aged care entry often creates the least benefit and the most friction. Timing matters—especially when a means assessment is imminent.
3) “Empty the bank account” while acting under Power of Attorney
Where a family member is acting under POA, there are legal duties and record-keeping obligations. If you’re navigating this, our POA guide is relevant: Power of Attorney and aged care: what you need to know.
4) Confusing estate planning with aged care planning
Some gifting is really estate planning. Some is aged care fee planning. Some is neither—and just risk. The best outcomes usually come from integrating the whole plan.
Worked example (corrected): why $70k is assessed
Example only. Assumes no other gifts in the current and prior relevant years, and uses general Services Australia gifting “free areas” logic.
Situation: Mum gifts $80,000 to children in one financial year.
Step 1: Apply the annual cap first
Even though there’s also a $30,000 over five financial years limit, you generally can’t gift more than $10,000 in any single financial year without assessment impact.
- Gift made: $80,000
- Allowed in that financial year: $10,000
- Excess (potentially deprived): $80,000 − $10,000 = $70,000
Step 2: What happens to the excess?
The excess amount is generally treated as a deprived asset for a period (commonly five years from the date of the gift), meaning it can still be counted under means testing even though Mum no longer owns it.
Why this matters for aged care:
If a deprived asset is still assessed, it can flow through to the numbers used in the aged care means assessment period—so the family may lose the money and still see higher assessed means for a time.
Practical checklist before making a gift
- Clarify the purpose: helping family, tax, estate planning, aged care, or pension outcomes?
- Confirm the rule impact: check gifting limits and deprivation treatment with Services Australia (and DVA if relevant).
- Check CGT exposure: will market value substitution apply? (ATO)
- Check duty exposure: confirm with your state revenue office (or conveyancer).
- Stress-test the family risk: divorce, bankruptcy, disputes, elder abuse, loss of control.
- Document everything: valuations, bank transfers, agreements, intentions.
- Model the aged care impact: means-tested care fee and broader cashflow implications.
If the family home is part of the decision, the rent vs sell choice is often a bigger lever than gifting: Renting vs selling the family home.
FAQs
How much can you gift without affecting the Age Pension?
Generally, Services Australia applies gifting free areas of $10,000 per financial year and $30,000 over five financial years (with no more than $10,000 in any single financial year). Confirm your parent’s position with Services Australia, as rules can change and prior gifts matter.
If I gift my house to my children, will Centrelink ignore it?
Not necessarily. If the transfer is treated as a gift (or not at arm’s length), the excess above allowable limits may still be assessed under deprivation rules for a period, even though you no longer own the asset. Property gifting can also trigger CGT and duty depending on the circumstances.
Does gifting affect aged care fees?
It can. Residential aged care uses a means assessment to determine eligibility for government support with means-tested fees and accommodation costs, and information may be drawn from the Age Pension means test.
Are there gifting exemptions for Special Disability Trusts?
There can be, subject to strict conditions and eligibility rules. This is specialist territory—get advice before proceeding.
Are granny flat arrangements treated as gifting?
They’re assessed under their own rules. If the arrangement breaks down or the older person leaves within five years, it can be reviewed and gifting rules may apply depending on circumstances.
Should we gift while acting under Power of Attorney?
Be careful. POA comes with legal duties and record-keeping expectations. Large transfers can raise risk and family conflict. Read: Power of Attorney and aged care: what you need to know.
What to do next
If your family is considering gifting (especially property) as part of aged care planning, it’s worth getting the numbers right before decisions become irreversible.
A sensible sequence is:
- Understand how means testing works: Aged care financial means test
- Map the home decision: The family home when moving into care
- Check accommodation strategy: Understanding RAD and DAP
- Then overlay gifting: Gifting rules’ impact on aged care fees and pension
CTA: If you want help modelling gifting decisions against aged care fees, pensions and family outcomes (without relying on assumptions), we can do this remotely via online meetings and secure document collection.
Disclaimer (general advice only)
General advice only: This information is general in nature and doesn’t consider your objectives, financial situation or needs. Aged care and Centrelink rules can change—confirm details with Services Australia/My Aged Care or seek personal advice.
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