Assessing returned gifts 108-06010020

1 January 2008 - Customer gives $40,000 to their child and on 11 January 2008 advises Centrelink of this change in circumstances.

The relevant financial account is reduced by $40,000 and the gift is coded on the customer record with a date of effect of 1 January 2008. Deprivation is assessed for $30,000, allowing for allowable annual gifting threshold of $10,000. Gift is also deemed for income.

Customer then tells Centrelink on 16th March 2008 it was only a loan to the child, not a gift, and it will be returned.

Action: Gift is then reassessed as never occurring and is removed from the customer's record (that is, deleted from the Gifted/Deprived Asset (GIFT) screen). In the same action, a $30,000 loan is coded on Direct Investments (SVDI) screen from 1 January 2008 to 15 March 2008 with a description of for example, 'returned gift net of $10,000'. Also, the ongoing loan of $40,000 is coded from 16 March 2008 and held until it is repaid.

Note: as the loan is taken to be assessed at $30,000 for the period from 1 January 2008 to 15 March 2008, and not the $40,000 loan in accordance with the actual nature of the transaction, no debt is raised and no arrears are payable.

1 January 2008 - Customer gives painting valued at $40,000 to their child and on 11 January 2008 advises Centrelink of this change in circumstances.

The painting is coded off and the gift is coded onto the customer record with a date of effect of 1 January 2008 and deprivation is assessed for $30,000, allowing for allowable annual gifting threshold of $10,000. Gifting is also deemed for income.

Customer then tells Centrelink on 16 March 2008 the child that day returned the painting.

Action: The gift is removed from the customer's record (deleted). In the same action it is coded on the SVDI screen with a description of for example, 'returned gift net of $10,000' with a value of $30,000 from 1 January 2008 to 15 March 2008. The painting is re-recorded as a non-financial asset, valued at $40,000 from 16 March 2008.

1st January 2008 - Customer gives painting valued at $40,000 to their child and on 11 January 2008 advises Centrelink of this change in circumstances.

The painting is coded off and the gift is coded onto the customer record with a date of effect of 1 January 2008 and deprivation is assessed for $30,000, allowing for allowable annual gifting threshold of $10,000. Gifting is also deemed for income.

Customer then tells Centrelink on 16 March 2008 both parties had decided that day the child would return the painting at some time in the future.

Action: The gift is removed from the customer's record (deleted). In the same action it is coded on the SVDI screen with a description of for example, 'returned gift net of $10,000' with a value of $30,000 from 1 January 2008 to 15 March 2008. The painting is re-recorded as a non-financial asset of the customer's, valued at $40,000 from 16 March 2008. Although the customer does not have possession, Services Australia can consider them the owner provided both parties agree and there is no documentation contradicting this.

1 July 2007 - Customer had given painting valued at $40,000 to their child and on 11 July 2007 had advised Centrelink of this change in circumstances.

The painting had been coded off and the gift coded onto the customer record with a date of effect of 1 July 2007 and deprivation had been assessed for $30,000, allowing for allowable annual gifting threshold of $10,000. Gifting was also deemed for income.

Customer then tells Centrelink on 16 August 2007 both parties had decided that day the child would return the painting. The deprivation had been maintained but the painting was also coded as an asset from 16 August 2007.

Action: The gift is removed from the customer's record (deleted). In the same action it is coded on the SVDI screen with a description of for example, 'returned gift net of $10,000' with a value of $30,000 from 1 July 2007 until zeroed on 18 October 2007 (the earliest possible).

1st January - Customer gives principal residence valued at $500,000 to their child and advises Centrelink of the change in circumstances. This was an exempt asset until the gift occurred.

The gift is coded on the customer record with a date of effect of 1 January 2008 and deprivation is assessed for $490,000, allowing for the allowable annual gifting threshold of $10,000. Gifting is also deemed for income.

Customer then provides evidence to Centrelink on 16 March 2008 the child has returned the principal residence.

Action: The gift is removed from the customer's record (deleted). The principal home is recorded as returned deprived asset on the SVDI screen as 'returned gift net of $10,000', valued at $490,000 and deemed, from 1 January 2008 to 15 March 2008. From 16 March 2008, if once again the home is an exempt asset, no asset is recorded.

1st January 2009 - Customer gives cash of $60,000 to their child and advises Centrelink of the change in circumstances.

The gift is coded on the customer's record with a date of effect of 1 January 2009 and deprivation is assessed for $50,000, allowing for the allowable annual gifting threshold of $10,000. Gifting of $50,000 is also deemed for income.

Customer then provides evidence to Centrelink on 30 June 2009 the child has returned an amount of $20,000. There is no intention for the child to return any additional funds.

Action: The original gift amount is removed from the customer's record (deleted). The original gift less the returned amount is then recorded on the customer's record. $40,000 deprivation is now assessed on $30,000, allowing for the annual gifting threshold of $10,000.

$20,000, the amount of the returned gift, is recorded on the SVDI screen from the original date of gift.

$30,000 Gifting and $20,000 Investments is now deemed for income.

The SVDI screen can then be updated from Date of Return to Nil, and assets updated from Date of Return to reflect the application of the $20,000 returned.