Lending Money to Family on the Age Pension: Centrelink's Gifting Rules Explained

You want to help your daughter with her car repayments, or give your grandson a hand with rent while he finishes his apprenticeship. It's your money, and it feels like a simple, generous decision.

If you're on the Age Pension, though, how you hand that money over — as a gift or as a loan — can genuinely affect what you receive from Centrelink. Get the paperwork wrong, or skip it entirely, and Centrelink can treat the money as if you still own it, or worse, as a "deprived asset" that reduces your pension anyway.

Here's how the rules actually work, and what your loan agreement needs to show.

This article is general information, not financial or Centrelink advice. For amounts near or above the thresholds below, speak with a financial counsellor or Services Australia directly before deciding.

Loan or Gift? Centrelink Treats Them Completely Differently

This is the single most important distinction, and it works in a way many people don't expect:

• A genuine loan is still counted as your asset — the money hasn't left your ownership, it's just been lent out. It's assessed under the assets test as a financial investment, and deeming rules apply to it whether or not repayments have actually started.
• A gift is money you no longer own. Gifts within the allowed limits (below) simply reduce your assets, which can actually help your pension. Gifts above the limits are treated as if you still have the money for five years — this is called a "deprived asset."

Neither option is automatically better — it depends on the amount and what you actually intend. What makes things go wrong is calling something a "loan" with no real documentation and no genuine expectation of repayment. Centrelink doesn't take your word for it either way; it looks at the evidence.

The $10,000 / $30,000 Gifting Rule

If you decide to gift rather than lend, Centrelink allows you to give away:

• Up to $10,000 per financial year, and
• No more than $30,000 over a rolling five-year period

These limits are shared across a couple — you can't each separately gift $10,000 in the same year. Anything above these limits is treated as a "deprived asset" and counted against you under both the income and assets tests for five years from the date of the gift, regardless of whether the money is still there or has already been spent.

Why "It's Just a Loan" Isn't Enough on Its Own

If the amount is larger than you're comfortable gifting, structuring it as a loan avoids the deprived-asset problem — but only if Centrelink genuinely believes it's a loan. A verbal arrangement, or a "loan" with no repayment terms and no real expectation of getting the money back, can be reassessed as a gift after the fact.

To be treated as a real loan, Centrelink generally expects to see documentation and evidence of a genuine lending arrangement — not just your word that it was a loan.

What Your Loan Agreement Needs to Show

A private loan agreement between family members should cover:

• The exact amount lent and the date it was transferred
• A real repayment schedule — amount, frequency, and start date
• Whether interest applies (most family loans don't charge interest, and that's fine — just state it clearly either way)
• Both parties' full names and signatures, dated at or near the time the money changed hands

The clearer and more genuine the repayment terms look, the stronger your position if Centrelink ever reviews the arrangement.

When Gifting Might Still Be the Simpler Choice

If the amount is comfortably under the $10,000/$30,000 limits and you genuinely don't want or expect it back, a straightforward gift is simpler than drafting a loan agreement you never intend to enforce. Save the loan agreement for amounts above the gifting limits, or for any amount where you do want a real, enforceable expectation of repayment.

Sources: Services Australia — Gifting rules, Services Australia — Asset types.

Frequently Asked Questions

Do I need to tell Centrelink about a family loan?

Loans and gifts above the reporting thresholds generally need to be reported as part of your regular income and assets updates. If you're unsure whether a specific arrangement needs reporting, contact Services Australia directly or speak with a financial counsellor.

Does an interest-free family loan still count as an asset?

Yes. Whether or not you charge interest, a genuine loan is still your financial asset until it's repaid, and deeming rules apply to it regardless of the interest rate you've set.

What happens if I don't document the loan and Centrelink asks about it?

Without documentation, Centrelink may treat the money as a gift rather than a loan — meaning if it exceeds the gifting limits, it can be assessed as a deprived asset for five years, even though you consider it a loan you expect to be repaid.

Can my partner and I each gift $10,000 separately?

No — the $10,000 annual and $30,000 five-year limits are shared between a couple, not doubled.

Does this apply to lending money to a business, not just family?

The same loan-versus-gift distinction applies, but business lending involves additional considerations (like whether it's genuinely a loan or an equity investment). If you're lending to help fund a family member's business rather than their personal expenses, it's worth getting specific advice on top of a written loan agreement.