Centrelink and Receiving Gift’s of Money

When someone’s parents give them money to help them through University how does this affect the money they receive each fortnight? This is actually a quite tough question and after having spoken to Centrelink staff myself I found even they have difficulty communicating whether that the money will affect their Youth Allowance or Austudy. Essentially it depends on the frequency and who is providing you the money. When someone gives you money this is technically called a “gift” and its important to note that money paid from an employer is never considered a gift and will always effect your Youth Allowance or Austudy in some way.

The following is some information that I was able to gain about receiving gifts of money from Centrelink. Its important that you don’t take this as advice its just some information that I was able to gather by calling them. Centrelink might change the rules on receiving Gifts and the information here may not be complete.

When does a Gift not affect Youth Allowance or Austudy?

If the money gifted is just a one off then Centrelink will not treat this money as income and will not reduce that persons fortnightly benefits (unless they breach a limit through the assets test).

When does a Gift affect Youth Allowance or Austudy?

As mentioned before it all comes down to frequency, so for example your parents decide to give you $500 each month to assist with the cost of living. When it becomes apparent to the Centrelink staff that your are receiving this money regularly then they will treat this as “income” almost like you have received it from a job. So, depending on your situation they may reduce your  fortnightly payment or Income bank proportionally.

Example:

Johns parents give him $2000 each semester which has 14 weeks. Centrelink then see’s that there is regularity in this gift and then divide up this $2,000 over the 14 weeks or 7 fortnights (Centrelink pays fortnightly) so that $285.70 ($2,000/7) will be considered as income and the amount of benefits they receive will be reduced accordingly.

Declare and avoid a Debt

Naturally you should declare all changes to your financial circumstances within 14 days. If Centrelink can trace money that you have received in your bank statement which you should have declared, then you may end up with a Centrelink Debt and have to pay back any money that you where not entitled to receive.

Difficulty with Centrelink

I wrote this article as I received a gift from my parents earlier in the year as I was moving and really needed the money to stay on my feet. Understandably prior to receipt of the gift I gave Centrelink a call to find out how it would effect my situation and found that it was best for me to receive it all at once. Although I will point out just because I received the sum all at once it does not mean every student should receive gifts in this way, you should assess your own financial situation.

However the point I am trying to make is that after getting confirmation from three different Centrelink representatives on three separate occasions that this gift would not affect how much money I am entitled too. I declared the gift within the 14 days of receiving it and assumed that It would be ok. Despite the promises that it would not affect my payments I discovered that my entire income bank had been wiped out and my payments reduced.

The effect of Centrelink treating this money as income means only 40-50% of the money gifted too me will actually benefit me. Understandably my Father wanted the money back! He had worked hard to make that money and once he found out 50-60% was to disappear and not benefit me he was furious. Why would he gift me money if less than half would make a difference? Fortunately I lodged a appeal on the decision with Centrelink and was able to confirm I had been given verbal assurance that the gift would not be income and the decision was reversed.

Although its understandable why Centrelink reduces payments when someone receives too much money. However when you are given assurance that it wont be reduced by three representatives and then do the right thing by declaring the gift and find out you have been given incorrect information. It makes you wonder why you where so honest in the first place. Perhaps if Centrelink is more organised and more efficient people would be less likely to get tricked as I was. It creates huge amounts of double and triple handling in phone calls and frustration in Centrelink branches, when only one call needed to be made. All this costs the taxpayer, encourages people to not take advice from Centrelink seriously and encourages people to cheat the system and not declare and risk a debt.

  • Liz

    I get abit confused with payments etc. I know a person who’s son is on youth allowance. He attends university but is away overseas a lot for sports competitions. My question is, the parents hold sponsor nights at pubs and auctions of paintings etc to help with the costs of sending their child to these sporting competitions. Is that classed as an income?? We are looking at weeks in Mexican resorts and other parts of the world. Gez I found it hard enough to feed my daughter and buy her the essentials on youth allowance. Yet alone send her overseas. Hope you can help with this as I am at logger heads with a friend who says it is not an income but I feel it is…

    • Hi Liz

      Thanks for commenting, really interesting question you have there… Wow, I could do with a holiday to a Mexican resort!

      My guess is that he should be reporting to Centrelink that hes getting a holiday to Mexico paid by his parents. Centrelink does have some specific rules on what is “income” and they will be able to tell him if it is or is not. Centrelink has their rules on income here

      If he didn’t report it…well im not sure how Centrelink will prove that he has had a holiday paid for him in Mexico, but he may incur a Centrelink debt or it could be interpreted as Well-fare fraud (not sure if its that serious though)

      Of course Liz, I am no expert on this topic, just spent a long time reading and writing about it.

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