Whilst these limits run concurrently, there is no double counting of asset disposals that exceed both rules. For example, from financial year five above:
Deprived asset from $10,000 limit = $16,000 - $10,000 = $6,000
Deprived asset from $30,000 five-year limit
= total gifts over last 5 years – deprived assets already counted over the last 5 years – $30,000 limit
= $66,000 ($16,000 + $8,000 + $17,000 + $9,000 + $16,000) –
$26,000 ($6,000 + $7,000 + $6,000 + $7,000) -
$30,000
=
$10,000
A deprived asset is counted as an asset and subject to deeming for the income test by Centrelink/DVA for five years from the date of the relevant gift. Importantly, the deprived asset assessment doesn’t reduce by $10,000 the next financial year just because a new annual limit is available, it will still count as an asset and be deemed until the five-year period expires.
The gifting/deprivation rules include many other nuances, but some key points to consider when advising clients include that:
- spouses can gift between each other without triggering the deprivation provisions;
- the limits do not apply individually for each member of a couple, but the couple as a whole;
- deprivation rules also apply for the aged care means test;
- disposals of life interests, including granny flat interests, can be complex and will be assessed depending on the terms of the life interest agreement;
- gifted assets can be returned, from which point Centrelink generally cease to assess them;
- deprivation rules may apply to beneficiaries who waive their interest in a deceased estate or super death benefit; and
- special disability trusts have a $500,000 gifting concession limit per beneficiary.
