Australians have long used gifts to transfer wealth between family members and friends, but when it comes to giving away significant assets—like property or large sums of money—before your passing, the legal concept of ‘gift inter vivos’ takes centre stage. In 2025, recent policy tweaks and ongoing economic shifts have made it even more crucial to understand the ins and outs of gifting while you’re still alive. If you’re considering making a generous gesture or planning for your family’s future, here’s what you need to know.
What Is a Gift Inter Vivos?
‘Gift inter vivos’ is a Latin term meaning a gift made between living people. Unlike bequests in a will (which only take effect after death), these gifts are immediate and unconditional. They can include cash, shares, property, or valuable items.
- Example: Transferring ownership of an investment property to your daughter while you’re alive.
- Not the same as: Setting up a trust or making a bequest in your will.
In Australia, gift inter vivos is commonly used for early inheritance, asset protection, or helping family members get a financial head start. But with the 2025 changes to tax and Centrelink rules, the stakes are higher than ever.
Tax Implications and Reporting in 2025
One of the biggest misconceptions is that gifts are always tax-free. While there’s no general ‘gift tax’ in Australia, there are several tax consequences to consider:
- Capital Gains Tax (CGT): If you gift an asset (such as real estate or shares), you may trigger CGT as if you sold the asset at market value. The 2025 federal budget reaffirmed this, tightening reporting requirements for property transfers between family members.
- Stamp Duty: Most states and territories impose stamp duty on the transfer of property, even if no money changes hands. For example, gifting a Sydney apartment to your son in 2025 could result in a significant stamp duty bill.
- Income Tax: If the gift generates income (e.g., shares that pay dividends), the new owner is responsible for declaring this income from the date of the gift.
Large cash gifts are generally not taxed for the recipient, but you may need to provide evidence to the ATO if the funds are later questioned. In 2025, the ATO continues to cross-reference property and bank transaction data to detect undeclared gifts or attempts to avoid tax.
Centrelink, Aged Care, and Gifting Limits
Australians receiving or applying for Centrelink benefits, especially the Age Pension, must tread carefully with large gifts. Centrelink assesses your assets and income to determine eligibility and payment rates.
- Gifting Rules (2025): You can gift up to $10,000 per financial year (and $30,000 over five years) without affecting your Age Pension. Gifts above these limits are counted as your asset for five years from the date of the gift.
- Aged Care Means Testing: Similar rules apply if you’re moving into aged care—significant gifts can impact your means-tested fees and eligibility.
- Real-World Example: If you gift $50,000 to a grandchild for a house deposit in 2025, $40,000 of that will be assessed as your asset for the next five years, potentially reducing your pension.
Recent 2025 policy reviews haven’t increased the gifting threshold, despite calls from advocacy groups. This means careful planning is crucial if you’re close to the asset limits for government support.
Practical Considerations and Risks
Gifting assets isn’t always straightforward. Here’s what to consider before making a gift inter vivos:
- Documentation: Ensure you have clear records (gift deeds, transfer documents, bank statements) to prove the gift was genuine and not a loan.
- Family Law Risks: If you gift assets to a child who later divorces, those assets may be included in their divorce settlement. In 2025, family law courts continue to scrutinise large gifts and loans from parents.
- Disputes and Challenges: Early gifts can sometimes trigger disputes among beneficiaries, especially if not all family members are treated equally. Transparency and communication remain key.
- Impact on Estate Planning: Gifting now reduces the value of your estate, which can simplify probate later but may also require an update to your will and estate plan.
With property prices rising and intergenerational wealth transfers accelerating in 2025, Australians are increasingly using gift inter vivos as part of their financial toolkit. But each situation is unique, so it’s important to weigh the benefits against the risks and obligations.
Conclusion: Make Your Generosity Count
Gift inter vivos can be a powerful way to help loved ones and manage your legacy, but the rules and risks in 2025 demand careful planning. From capital gains tax to Centrelink rules and family law risks, understanding the full picture ensures your generosity has the intended impact—without unexpected surprises.
