Gift Tax in Australia: What You Need to Know About Gifting Money to Children

Gifting money or assets to children or family members is a generous way to share wealth. But it raises important questions such as, is there a gift tax in Australia, what taxes might apply and how to structure gifts so you don’t create unexpected tax or benefit implications? Let’s take a look at the up-to-date rules on gifts and taxation, strategies and common pitfalls so you can plan gifting confidently.

In this article, we will go through the following:

• Does Australia have a gift tax?

• The various types of gifts and when tax implications will arise.

• Some of the key tax rules: Capital Gains Tax, Stamp Duty and Income Tax.

• Centrelink gifting rules.

• Tax-free gifts and exemptions.

• Strategies for tax-efficient gifting.

In the financial services industry there is a morbid saying when it comes to gifting, “give with the warm hand, not the cold one”. While morbid, the phrase emphasizes the joy and satisfaction that comes from giving while you’re alive to see your generosity at work and witnessing the impact.

Does Australia Have a Gift Tax?

No - Australia does not currently have a dedicated “gift tax” like the U.S or the U.K. Having said this, certain gifts can trigger other tax obligations such as capital gains tax, stamp duty and income tax. Large gifts can affect eligibility for government benefits such as the Age Pension even though no direct “gift tax” is payable.

The Types of Gifts and When Tax Issues Arise

Here are the following types of gifts and when they may trigger tax or legal implications:

Key Gifts and Taxation Rules to Be Aware Of

Capital Gains Tax (CGT)

If you gift an asset (shares, property, etc.) that has increased in value, the ATO treats this as a disposal at market value. You may need to pay CGT on the gain.

Stamp Duty / Transfer Fees

Property transfers may trigger stamp duty or land title fees depending on the state/territory.

Income Tax

Gifts themselves aren’t taxable for the recipient. But any income generated from a gifted asset (e.g. interest, rent, dividends) is taxable at the recipient's marginal tax rate.

Reporting and Record Keeping

For gifts that trigger CGT, or if you receive income from transferred assets, you’ll need documentation kept on file. A valuation at the time of gift (especially property), cost base, transfer paperwork should all be kept on file for 5 years.

Centrelink and Government Benefit Gifting Rules

Although there is no “gift tax” as such, large gifts (specifically cash) can affect the eligibility of pension, aged care treatment and other government benefits under the current means testing.

The Centrelink Gifting Rules currently allow gifting up to $10,000 per financial year with a maximum of $30,000 over five years without affecting the means test. Exceeding that can reduce government benefits.

One thing to note is that gifts made prior to applying for the aged pension may be scrutinised or counted as “deprived assets” in means testing.

Tax-Free Gifts and Exemptions

These are the current options and exemptions for making tax free gifts:

• Pre-CGT assets (those acquired before 20 September 1985) are often exempt as they have special treatment.

• Cash gifts to children. Not taking into account the Aged Pension (these gifts can reduce your entitlements), these are not subject to tax. For example, helping kids out with a deposit on their first home.

• Charitable donations. These often come with a tax deduction.

• Small value personal assets under a certain threshold. For example, personal items not meant to producer income.

Strategies for Tax-Effective Gifting

There are a few strategies that could make your gifting more tax efficient including:

• Timing your gifts before assets appreciate too much. For example, gifting earlier when the market value of the asset is lower and hence reduces CGT.

• Spreading gifts over several years rather than one large lump sum to stay under Centrelink’s gifting thresholds. (i.e $10,000 each year).

• Using trusts or structured arrangements if you want control over how and when the recipient accesses the gift. This should be done in conjunction with your Accountant and Solicitor.

• Considering non-concessional contributions to superannuation rather than direct cash gifts in some cases. This will assist with boosting retirement savings and/or equalising balances.

• Choosing assets with minimal capital gains or assets already owned that have little value gain since being purchased.

Gifting Scenarios And Their Tax Implications

Gifting cash to adult children:

Usually simple, no tax, as long as amounts aren’t so large they affect benefit eligibility.

Gifting property to a child:

Must consider CGT, stamp duty, legal transfer costs; documentation and valuation important.

Retiree gifting:

A self-funded retiree must think about how gifts reduce assets, how benefit eligibility or aged care means tests may be affected.

Gifting to minors:

More legal structure, possibly trust required, oversight needed, and considerations about how the minor handles or uses the gifted assets.

Frequently Asked Questions (FAQs) About Gifts And Taxation

Is there a gift tax in Australia?

No dedicated gift tax. But gifts can trigger other tax or legal implications depending on value, type of asset, and timing.

How much money can I gift tax-free?

There is no fixed dollar limit for “tax-free gifts” in general. However, for government benefits like pensions or Centrelink, there are gifting rules that limit how much you can give without affecting eligibility.

Do I need to report a gift to the ATO?

If the gift involves an asset with capital gains that must be declared, or you receive income from the gifted asset, then yes. For simple personal gifts, often no. Keeping records is critical.

Are gifts to family members deductible?

Typically no. Unless the gift is to a registered charity or organisation that qualifies as a Deductible Gift Recipient (DGR).

What about gifting property - do I pay CGT?

Yes, if that property has appreciated since purchase. The CGT event is triggered by transfer, with market value used to measure gain, and possibly stamp duty depending on state.

Can gifts affect government benefits (pension / aged care / Centrelink)?

Yes. Large gifts or patterns of gifting may count in means testing, or reduce eligibility for some payments.

In summary there is no formal gift tax in Australia, but that doesn’t mean gifting money or assets is free of consequences. Depending on what you give, whether cash, shares, property, or more complex structures like trusts, you may face capital gains tax, stamp duty, or income tax obligations. On top of this, large gifts can reduce or delay access to government benefits such as the Age Pension due to Centrelink’s gifting rules, which cap how much can be gifted without affecting entitlements.

Some gifts are effectively tax-free, such as cash gifts to family, small personal items, or donations to eligible charities. However, when gifting larger assets, it’s critical to plan ahead, document transactions properly, and consider the timing and structure to avoid unintended financial consequences.

This is where the saying, “give with the warm hand, not the cold one,” rings true. By gifting while you are alive, you not only get to witness the joy and positive impact your generosity brings, but you also have the opportunity to structure gifts in a way that is tax-efficient, Centrelink-compliant, and aligned with your broader estate planning goals.

With careful planning, whether by spreading gifts over time, gifting assets with minimal capital gains, or using tools like trusts or super contributions, you can share your wealth confidently, knowing you’re maximising benefits for your loved ones while minimising risks.

In short: give early, give wisely, and give in a way that lets you enjoy the results of your generosity.

👉 Book a consultation with our financial planner today to explore tax efficient gifting and how our tailored approach to private wealth management can help you preserve, grow, and transfer your wealth with confidence.

Disclaimer: This information is general in nature and does not constitute personal financial advice. It is not intended to influence any financial decisions. We recommend speaking with a licensed financial adviser to assess the suitability of any strategy for your personal circumstances.