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Cash gift and tax


Guest MrsHills

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Guest MrsHills

Friend father wants to give him $20,000 as a gift, He sold his house and purchased a smaller property and wants to give the children money now rather than when he dies. Does this have any tax implications for my friend? or to his father and any pension he receives???

any ideas anyone?

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Hi

 

Gifts of cash generally no tax implications http://www.bhatt.id.au/blog/australian-tax-tips-are-gifts-taxable/.

 

Potential Age Pension implications for gifting, Below is taken from Centrelink website http://www.humanservices.gov.au/customer/enablers/assets

 

Disposing of assets

 

You or your partner can give away money or other assets to any value you choose at any time, but the rate of income support payment you receive may be affected.

Gifting is a term used when you or your partner:

  • give away assets, including transferring assets for less than market value, and
  • do not receive adequate consideration for the gift or transfer in the form of money, goods or services.

We also use the term 'deprived asset' for a gift.

 

You or your partner can give away money or other assets to any value you choose at any time, but the rate of income support payment you receive may be affected if you gift assets worth more than the allowable gifting amount or ' free area'.

 

The gifting rules are:

  • there is an allowable gifting amount or free area for a single person or a couple of $10 000 in a single financial year, and
  • there is an allowable gifting amount or free area for a single person or a couple of $30 000 over a five year rolling period. The rolling five year period is the current financial year plus the previous four financial years.

Any asset or amount that you gift over and above either the $10 000 in a single year free area or the $30 000 five year free area is treated as a gift or deprived asset for five years from the date of disposal.

Gifts are:

  • included in your assets until the fifth anniversary of the date of the gift
  • deemed to earn income in the same way as financial assets.

Any amounts you disposed of or gifted in the five years immediately before you were granted a payment can also be considered.

Gifting includes:

  • money or any asset you have transferred to members of the family or other relatives
  • gifts to other people or charities
  • gifts to private trusts or companies where you or your partner are not the controller of the trust or company
  • assets sold for less than their market value
  • relinquishing control of a private trust or company. If you do this you will be considered to have gifted all the assets held by the trust or company
  • transferring your shares in a private company or units in a fixed trust and you do not receive full market value for them.

Gifting does not include you selling or reducing your assets to meet normal expenses, for example, to buy consumer goods like a fridge or washing machine, for home maintenance/improvements, or to pay for holidays. Nor does it include payments for services received, e.g. lawn mowing.

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