If you’re a retiree or pre-retiree on the Sunshine Coast thinking about helping your adult child get ahead financially, you already know the tension. You’ve worked hard, built equity, and put yourself in a position to enjoy your retirement. But watching your kids struggle with property prices, cost of living, or just getting a foothold, that’s not easy to sit with.
The “Bank of Mum and Dad” is now one of the largest informal lenders in Australia. Mozo’s 2025 research found that three quarters of parents providing financial assistance do so with no expectation of repayment, up from just one third in 2021. The average deposit contribution has risen to $74,040. For many first home buyers, parental support is no longer a bonus. It’s the only way in.
But here’s the part that doesn’t get talked about enough. Giving money to your children can actually improve your own financial position, particularly your Centrelink entitlements, if it’s done within the rules. It can also risk your retirement if it’s not.
That tension is especially real in Caloundra. The average resident here is 58 years old, and property values have climbed to a median of $1,107,500 for houses, up 13% in the past year alone. Many Caloundra parents have significant equity built up over decades. The question isn’t whether they want to help. It’s whether they can afford to, and how to structure it so that generosity doesn’t quietly erode their own retirement.
This guide walks you through the key considerations from your perspective as the one doing the giving, what the rules are, and where the traps sit.
How Gifting Can Improve Your Centrelink Position
If you’re receiving a full or part Age Pension, or expect to in the near future, the assets you hold directly affect how much you receive. Two separate tests apply, the assets test and the income test, and both can reduce your pension payments.
The assets test assesses the total value of what you own. For a homeowner couple, the combined asset threshold for a full pension is currently $481,500. For a single homeowner, it’s $321,500 (higher thresholds apply for non-homeowners: $739,500 couple / $579,500 single). Every dollar of assets above the lower threshold reduces your pension by $3 per fortnight for a couple, or $3 per fortnight for a single person.
The income test uses deeming rates, which are assumed rates of return applied to your financial assets regardless of what they actually earn. As of 20 March 2026, these rates sit at 1.25% for the first $64,200 and 3.25% for assets above that. If you hold significant savings or investments, the income test may be the binding constraint on your pension, even if your asset levels look comfortable.
Here’s where gifting becomes relevant. If you transfer assets to your children within Centrelink’s allowable limits, those assets are no longer counted in your means test. You can gift up to $10,000 in a single financial year, and no more than $30,000 over five consecutive financial years. Stay within those thresholds and the gifted amount disappears from your Centrelink assessment entirely. Go over, and the excess is treated as a deprived asset.
The Deprived Assets Dilemma
Any amount you gift above Centrelink’s thresholds is treated as a “deprived asset” for five years. That means Centrelink continues to be counted under the assets and income tests, which can reduce your pension payments.
For example, if you gift $80,000 in a single year, Centrelink treats $70,000 of it as a deprived asset (the amount above the $10,000 annual limit). For five years, that $70,000 stays on your books for pension purposes. It doesn’t matter that you no longer have it. Your Age Pension will be calculated as though you do.
This is one of the most common mistakes we see in retirement planning. Parents who give generously without understanding the deprived asset rules often end up worse off than if they’d simply kept the money.
Longevity Risk: Will Your Money Last as Long as You Do?
The other risk that gets underestimated is longevity. Australians are living longer than previous generations, and the financial implications of that are significant. A couple who retires at 65 today needs to plan for the realistic possibility that one or both of them will live into their 90s. That’s potentially 30 years of living expenses, healthcare costs, and inflation to fund.
Every dollar you give away is a dollar that can’t compound in your favour over those decades. If you’re 65 and gift $100,000 now, you’re not just losing $100,000. You’re losing the investment returns that money would have generated over the next 20 to 30 years. Depending on your return assumptions, that could be $200,000 or more in forgone growth.
This doesn’t mean you shouldn’t help your children. It means you need to model the impact properly before committing, so you know exactly what you’re giving up and whether your remaining resources are sufficient to sustain you in retirement.
Seeing What Your Inheritance Can Do Now
There’s a genuine argument for giving some of your wealth while you’re alive rather than leaving it all as an inheritance. Your children may need the money more now, when they’re trying to buy into suburbs like Wurtulla, Pelican Waters, or Bokarina, than they will in 20 or 30 years when they’ve already built their own asset base.
An early inheritance, structured properly, lets you see the impact of your generosity firsthand. You get to watch your children use it, benefit from it, and build on it. That’s something a posthumous inheritance can never offer.
The key is making sure that giving now doesn’t come at the cost of your own security later. That’s a modelling exercise, not a guessing game, and it’s exactly the kind of work a good financial adviser should be doing for you.
Your Main Options as the “Bank of Mum and Dad”
Gifting a Cash Amount
The most straightforward option. Australia does not have a separate “gift tax,” so a genuine cash gift normally doesn’t create an immediate tax bill for you or your child.
From a Centrelink perspective, gifts within the $10,000/$30,000 thresholds are removed from your assessable position entirely, which can increase your pension. Gifts above those limits trigger the deprived asset rules outlined above.
If your child is using the gift toward a property purchase, getting the documentation right matters. Lenders will usually ask for a signed gift letter or statutory declaration confirming the contribution is a non-repayable gift rather than a loan before they approve finance. A genuine, non-repayable cash gift usually doesn’t affect your child’s eligibility for the First Home Owner Grant or first-home buyer concessions, as long as they meet the standard rules.
A Formal Family Loan
Some parents prefer to structure their contribution as a documented loan rather than an outright gift. This approach has distinct advantages for your retirement position.
A properly documented loan reduces your assessable assets for Centrelink purposes, because the outstanding loan balance is considered an asset you still hold. But unlike cash sitting in a bank account, a loan agreement provides a framework for repayment over time. It clarifies expectations, protects both parties, and provides a cleaner structure if your child’s relationship breaks down or circumstances change.
The loan should be documented with a written agreement setting out the amount, repayment terms, and interest rate (even if that rate is zero). Without documentation, Centrelink may treat the money as a gift rather than a loan, which could trigger the deprived asset rules unnecessarily.
If you have more than one child, a documented loan also provides a fairer basis for keeping things equitable across the family.
Acting as a Guarantor
A guarantor arrangement allows your child to borrow more by using your property as additional security. This can help them avoid Lenders Mortgage Insurance and access a loan they may not qualify for on their own.
From your perspective, this is the option that feels low-risk until something goes wrong. As guarantor, you are legally responsible for the full loan amount if your child cannot service the debt. If payments stop due to job loss, illness, relationship breakdown, or any other reason, the lender can pursue you directly, including seeking to sell your home.
Guarantor arrangements also appear on your credit file and can limit your own borrowing capacity. Before agreeing to anything, get independent legal advice.
Using Your Home Equity
For Caloundra parents who are asset-rich but cash-poor, holding a home worth over $1 million but with limited liquid savings, drawing on equity may seem practical. Before doing so, it’s worth understanding the options and how they interact with your pension.
A reverse mortgage allows homeowners aged 60 or older to borrow against their property without making regular repayments. The loan, plus accumulated interest, is repaid when the home is sold or the borrower passes away. The critical risk is compound interest. A loan that looks manageable today can grow substantially over 20 to 30 years, significantly eroding the value of the estate your children would otherwise inherit.
The government-backed Home Equity Access Scheme (HEAS, administered through Services Australia) offers an alternative. It allows eligible Age Pension recipients to draw fortnightly payments secured against their home at a lower interest rate than most commercial reverse mortgage products, with stronger consumer protections and a no-negative-equity guarantee. This option is often overlooked but may suit parents who need supplementary income rather than a lump sum.
Both mechanisms interact with the Age Pension in ways that are easy to misunderstand. Funds drawn from equity and then gifted to a child are still subject to Centrelink’s gifting rules. And if equity is converted to cash that you continue to hold, it becomes an assessable asset, potentially affecting your pension payments.
What About Your Superannuation?
If you’re planning to draw from super to fund a gift or loan to your child, the implications depend on your age, your fund type, and how long you have left in accumulation.
Withdrawals from super are generally tax-free for those aged 60 and over from a taxed fund. But withdrawing a lump sum permanently removes that capital from a tax-advantaged environment. Money inside an accumulation super account compounds with 15% tax on earnings (or 0% in pension phase). Money outside super is taxed at your marginal rate. For a parent aged 60 with $500,000 in super earning 7% per annum, keeping it inside super delivers roughly $150,000 more after 20 years than withdrawing now.
Super held in accumulation phase by someone under Age Pension age (67) is fully exempt from the assets test. Once withdrawn, it becomes assessable, with the thresholds noted above. The timing of super withdrawals relative to the Age Pension assets test is one of the less intuitive but most consequential factors to model before you act.
What Happens If Things Go Wrong
One of the most overlooked risks in any “Bank of Mum and Dad” arrangement is what happens if your child’s relationship breaks down. If your child separates from a partner after you’ve contributed to a property purchase, the contribution, particularly if undocumented, may be treated as part of the joint asset pool in Family Court proceedings.
A documented loan is much easier to protect than an undocumented gift. This is one of the strongest practical arguments for formalising any significant financial assistance, regardless of how solid your child’s relationship appears.
It’s also worth thinking about siblings. Helping one child and not another, or helping at different amounts, can create family tensions that outlast the financial transaction. A good financial adviser can help you structure assistance in a way that accounts for the whole family, not just the immediate need, and that can be documented as part of your estate planning.
Government Support Your Child May Already Be Eligible For
Before tapping into the “Bank of Mum and Dad,” it’s worth understanding what your child may already qualify for. The federal First Home Guarantee allows eligible buyers to purchase with as little as a 5% deposit without paying Lenders Mortgage Insurance, with the government guaranteeing the remaining portion. Queensland’s First Home Owner Grant provides an additional $30,000 for eligible new builds.
These schemes won’t cover everything, but they may reduce how much support is actually needed. Understanding them first helps you assess whether your contribution is filling a genuine gap.
Getting the Right Advice
The “Bank of Mum and Dad” involves multiple intersecting considerations. Centrelink rules, superannuation strategy, tax implications, estate planning, and family dynamics all matter. No single decision sits in isolation.
An independent financial adviser who understands both retirement planning and intergenerational wealth transfer can help you model the real impact of different approaches on your retirement income, pension entitlements, and long-term financial position. They can also help you structure any assistance in a way that protects both you and your child.
For Caloundra families considering whether to help their children buy into suburbs such as Pelican Waters, Wurtulla, Birtinya, or further afield into North Lakes,, the financial variables involved are significant enough to warrant proper advice before any commitment is made. If you’re working through this decision and would like to talk through your options, our retirement planning advice team would be glad to help.
Reach out to book a conversation with our team.
Frequently Asked Questions
Centrelink allows gifts of up to $10,000 in a financial year and no more than $30,000 over five years without affecting your pension. Amounts above these thresholds are treated as deprived assets and counted in your Age Pension assets test for five years, which can reduce your pension payments even though you no longer hold the funds.
Yes, if done within the rules. Reducing your assessable assets through allowable gifting can result in a higher fortnightly pension payment if you are currently receiving a part pension. The effect depends on your overall financial position and which test (assets or income) is currently the binding constraint. This is exactly the kind of scenario worth modelling with an adviser before you act.
A deprived asset is any amount you gift above Centrelink’s allowable thresholds. It’s counted in your means test for five years as though you still hold it, even though the money is gone. This can reduce your pension payments without providing any corresponding benefit.
Yes, and it can be significant. A properly documented loan reduces your assessable assets, because the outstanding loan balance is considered an asset you still hold. An undocumented gift is subject to the gifting rules above. Getting the structure right and the paperwork to match can make a material difference to your Centrelink assessment.
Without documentation, a parental contribution can be treated as part of the joint asset pool in Family Court proceedings. A written loan agreement is much more defensible than an undocumented gift. This is one of the strongest arguments for formalising any significant family financial assistance, regardless of circumstances.
For most Australians aged 60 and over drawing from a taxed super fund, withdrawals are tax-free. However, withdrawing super permanently removes that capital from a tax-advantaged environment, which affects long-term compounding. The timing of withdrawals relative to Age Pension eligibility also has Centrelink implications worth modelling with an adviser.
The Home Equity Access Scheme is a government-administered program that allows Age Pension recipients to draw fortnightly loan payments secured against their home, at a lower interest rate than most commercial reverse mortgage products. It includes a no-negative-equity guarantee and is administered through Services Australia. It may suit parents who want to supplement retirement income rather than access a lump sum, and is worth considering alongside commercial equity release options.
Very common, and growing. According to the Productivity Commission, if the “Bank of Mum and Dad” were a formal lending institution, it would rank between the fifth and ninth largest mortgage lender in the country. Mozo’s 2025 research found that three quarters of parents providing financial assistance now do so with no expectation of repayment, up from just one third in 2021.
DISCLAIMER – The information provided in this blog is general and does not consider your individual financial needs or objectives. It does not constitute personal advice. We recommend seeking out professional and independent financial, legal and tax advice which has been designed for your individual situation before acting on any information contained below.
