Deprivation vs. Gifting:
What Centrelink Can and Cannot Count
One of the most misunderstood — and most misapplied — rules in the Age Pension system. Understanding the difference between a mandatory accounting write-down and a voluntary gift could mean thousands of dollars in back-payments.
Information current as of March 2025. Gifting thresholds and deprivation rules are set by legislation and do not change with CPI. Always verify at servicesaustralia.gov.au/gifting.
The Key Distinction
Deprivation
A mandatory accounting write-down — the value of an asset falls because of normal market forces, depreciation, or a legal obligation. You did not choose to reduce your assets.
Examples:
- Share price falls on the ASX
- Property value declines in a down market
- Car depreciates over time
- Paying off a legitimate debt
- Spending on normal living expenses
✓ Centrelink CANNOT penalise you for deprivation. It is not a gift.
Gifting
A voluntary transfer of assets — you choose to give away money, property, or assets for less than their market value. Centrelink may count the gifted amount as if you still own it.
Examples:
- Giving money to children or grandchildren
- Selling a property below market value
- Transferring assets into a trust
- Forgiving a loan you made to someone
- Paying someone's expenses as a gift
⚠ Centrelink MAY count gifts above the threshold as a deprived asset.
The Gifting Thresholds (2025)
You are allowed to gift a certain amount each year without it affecting your pension. Above these thresholds, Centrelink treats the excess as a "deprived asset" and continues to count it in your assets test for 5 years.
| Threshold | Amount | Notes |
|---|---|---|
| Annual gifting free area | $10,000 per year | Applies per financial year (1 July – 30 June) |
| 5-year gifting free area | $30,000 over 5 years | Combined total across any rolling 5-year period |
| Deprived asset period | 5 years | Excess gifts counted in assets test for 5 years from date of gift |
Important: These thresholds are the same regardless of whether you are single or a couple. They have not changed since 2002 and are not indexed to inflation.
Where Centrelink Often Gets It Wrong
The most common error is Centrelink treating a deprivation (market loss, normal expense) as a gift. This can result in your pension being reduced or denied incorrectly. If any of these apply to you, you may have grounds for a review.
Centrelink counted a share price drop as a gift
Market losses are not gifts. Centrelink must use the current market value of your shares, not the price you paid.
Centrelink counted money spent on home renovations as a gift
Spending money on your principal home is a normal living expense. Your home is exempt from the assets test anyway.
Centrelink counted paying off a mortgage as deprivation
Paying off a legitimate debt reduces both your assets and your liabilities equally. It is not a gift.
Centrelink counted a loan to a family member as a gift
A documented loan (with a written agreement) is an asset (money owed to you), not a gift. You must be able to show a loan agreement.
Centrelink applied the gifting rule to a transfer more than 5 years ago
Deprived assets are only counted for 5 years from the date of the gift. After 5 years, the rule no longer applies.