Q. I am 64 with $575k in super and my wife is 58 with $20k in super. As I am applying for aged pension at 65 I was going to transfer 200k to her. However the Centrelink form asks ” In the last 5 years have you given away, sold for less or surrendered a right to any case assets, property or income? Do I answer YES or NO?

A.  Normally Age Pension recipients are entitled to “gift” up to $10,000 in any one year or $30,000 over a 5 year period.  Gifting in excess of this is assessed against your assets test for a period of 5 years from the date of disposal.

However “Gifting” between spouses is exempt from the rules.  So you should answer “No”.

A legitimate strategy to reduce the impact of the Assets Test is to transfer assets out of your Superannuation funds and transfer them to your wife.  Be careful of the Superannuation Non-Concessional Contribution cap of $150,000 for each financial year or $450,000 every 3 years.

Subject to other contributions that may have been made to your wife’s Super this financial year, you could look to put up to $150,000 into Super prior to 30 June and then a further $150,000 in the next financial year whilst preserving the right to access the aggregate contribution cap of $450,000.

As your wife is under 65, she does not have to satisfy a work test to have funds contributed to Superannuation.  As she is under pension age, assets held in Superannuation are not counted towards your combined assets test for Centrelink purposes until she is of Age Pension age.  Thereby legitimately reducing the impact of the Assets test for Age Pension purposes.


Follow Andrew on Twitter @AndrewHeavenFP.  This article was originally published in The Australian.