Assessing returned gifts 108-06010020

The return of a gifted asset is a notifiable event. It may occur where:

• the gifted asset has been returned
• although not expected at the time of the gift, the recipient has now provided the donor with adequate remuneration
• a customer gifts an asset to a person and then inherits that specific asset from the estate of the deceased person
• although the customer still does not have the asset, both parties agree it is again the property of the original owner and will be returned

In most cases, customers are better off after deprivation is assessed as there is a free area, the value of the asset no longer increases, and it is not counted at all after 5 years. Therefore, returns of gifts should not be common. However, some customers may wish to have a gift returned because they:

• actually need the assets Services Australia is maintaining as deprived
• gifted more than the free area last year, but by having the excess returned now, they can then re-gift it and have another free area applied
• are in fact worse off. This can happen if they are income tested and they gifted a non-financial asset thereby increasing their deemed income, or if they gift an exempt asset such as their home (and do not have the gift disregarded under the granny flat provisions)

If the person who returns the gift is also a Centrelink customer then they will not be assessed as depriving themselves of an asset when they return the gift.

Prior to 18 October 2007, where a disposed of asset was returned to a customer, the amount of the gift could not be disregarded and it had to be maintained for 5 years. This meant if it was returned, the customer would be assessed with the returned asset value and the deprivation amount.

From 18 October 2007, policy was amended (and supporting legislation was passed) which allowed a gift to be disregarded from the date of return. This policy also applies to gifts which were returned prior to 18 October 2007, although that is the earliest date the period of deprivation can be ended. For the period between the gift and its return (or 18 October if later), it is still to be assessed under the gifting rules, that is, for its value less the allowable threshold, and deemed.

The Centrelink customer record system was only designed to automatically end date deprivation after 5 years. Therefore, an alternative coding method has been devised.

However, because the amount coded is the same as the assessed amount of deprivation, there should be no arrears or overpayments. Nevertheless, it is possible the customer's rate may change when a returned gift is coded as:

• the recorded value of the asset will not be reduced by the gifting free area
• the asset's value may have changed, or
• the customer may take steps to make the asset exempt, for example, by making it their home again