Ten things to know before gifting wealth
What if you opted to give a present that could help shape the financial future for yourself or your loved ones? Before you make that transfer or sign over an asset, it’s important to consider the opportunities, risks and rules that come with financial gifts to ensure you avoid any unexpected surprises along the way.
1. Investing for family
Imagine you make an initial investment of $1,000 in a long term, high return investment. Each year you add an additional $1,000. After 10 years, your investment could be worth much more.
For example, a total of $11,000 invested in this way in a high growth investment option at 8.78% per annum* could have delivered more than $17,000 in total after 10 years.
2. Investing for yourself
One of the most powerful gifts you can give yourself is a contribution towards your long-term financial wellbeing. If you won’t need to withdraw your money before you retire, super is one of the most tax effective long-term investments there is.
3. The Bank of Mum and Dad
Helping children into the property market is one of the most common forms of financial support. A timely gift early in life could mean a significant boost to your child’s financial situation in the long term. Popular gifts that deliver a financial benefit include:
- Free rent.
- Covering living costs.
- A new car or education support.
- A contribution towards a house deposit.
4. Keeping gifts in the family
Parents often worry about financial gifts to a child being lost in the event of a divorce but there are steps you can take to help protect them. These may include:
- Lending instead of gifting the money under an arrangement that involves signatures and a repayment schedule.
- Establishing a trust.
One in five Australians (23%) keeps at least some of their wealth in a family trust^. A trust can own property, for example, and protect funds for future generations.
Seek professional legal advice if you’re considering these strategies.
5. Gifting can affect Centrelink entitlements
If you’re 62 or older and may apply for the Age Pension within five years or if you’re already receiving government Age Pension payments – gifting may affect these.
Centrelink rules mean that gifts above $10,000 in a single year (or $30,000 over five years) are counted as your assets for both assets and income test purposes for five years. This applies to money, property transfers and even forgiving loans – and depending on your financial situation, it could affect your eligibility or lower your Age Pension payment.
6. Tax implications of gifting
You can generally give any amount of money as a gift in Australia without the recipient paying tax on it.
However, if you gift an asset, such as shares or property, it may trigger a Capital Gains Tax (CGT) event. This is when you need to report capital gains and capital losses in your tax return.
Transferring assets for less than market value may also have tax consequences, as the Australian Tax Office will generally treat it as though it was sold at market rates on the day it was transferred.
For individual taxpayers who have owned an asset for 12 months or more, there is a CGT discount of 50%, meaning you pay tax on only half the net capital gain on that asset.
Learn more about ATO rules on gifting and consider consulting a tax professional.
7. Having the hard conversations
Bequeathing wealth or inheriting it can create tension if expectations aren’t clear. Common problems include:
- Unequal gifts between siblings.
- Blended family dynamics.
- Business or farm succession.
- Inheritance timing.
Making a valid Will, making your wishes known if you’re leaving wealth to family members and documenting agreements between family members may help prevent disputes later.
It may help to speak to a financial adviser or a lawyer first.
8. Leaving super behind
Most people expect to use most of their super after they retire. To gift any leftover super money, it’s important to nominate a beneficiary.
Under current super and pension rules, a beneficiary can only be a dependant or personal legal representative.
Depending on who your super is paid to and how they receive the money, there may be taxes involved.
9. Don’t give more than you can afford
It may feel good to gift money or investments but make sure you can maintain your lifestyle and cover your expenses before making significant gifts.
10. Seek financial advice
The rules around gifting, tax and estate planning are complex. Professional advice can help you:
- avoid unintended Centrelink impacts
- minimise tax
- protect family relationships
- structure gifts for the long term.
* This calculation assumes a $1,000 starting investment, plus an additional $1,000 a year invested over 10 years in a high growth investment option. Using the Moneysmart compound interest calculator, interest is calculated annually at 8.78% p.a. After 10 years, the total invested is $17,354.
The annualised net return of 8.78% used reflects the annualised net return of the CFS High Growth investment option over 10 years to 31 October 2025. Returns for this option are calculated on a cumulative year on year basis which are then annualised. Calculations are based on exit price to exit price with distributions reinvested, after ongoing fees and expenses but excluding individual tax, member fees and entry fees.
^ CFS commissioned research that was conducted with 2,250 Australians between January and March 2025.
Source: Colonial First State
