TRANSFER THESE 3 ASSETS BEFORE YOU NEED AGED CARE: Or Centrelink Costs You Thousands (2026 Warning)

Centrelink's 'deprivation provision' counts gifted or undervalued assets as still belonging to you for 5 years if transferred to reduce assessable assets. Limits are $10,000 per financial year and $30,000 over a rolling 5-year period. Exceeding these limits creates 'deprived assets' which affect both assets and income tests, leading to reduced pension payments. For example, a $70,000 deprived asset can reduce age pension by approximately $27,000 over five years.

A properly documented loan with agreed repayment terms is not treated as a deprived asset, unlike a gift. While a loan still counts as an assessable asset, it prevents the 5-year deprivation clock from starting. It's crucial to understand that a loan does not reduce assessable assets but prevents the penalty associated with gifts. Families should seek advice from a financial advisor or Centrelink's Financial Information Service before transferring money to understand the documentation required for loans.

While the principal home is exempt from the age pension assets test, it becomes assessable for aged care means testing unless a 'protected person' (e.g., spouse, dependent child, long-term carer) lives there. If no protected person remains, the home is included in the assessment, albeit capped at a specific value ($214,884 as of March 20, 2026). Transferring the home title to children is considered a gift and triggers the 5-year deprivation rule, meaning Centrelink still counts its value as yours for 5 years.

Superannuation in the accumulation phase is not assessed by Centrelink until the individual turns 67. At this point, the entire balance becomes assessable, which can significantly reduce or eliminate age pension payments for couples when the younger partner reaches 67. Prior to turning 67, there is flexibility to move super funds into non-assessable assets, such as home improvements, to optimize Centrelink eligibility.

Upon entering residential aged care, Services Australia conducts an income and assets assessment (Form SA457). This form asks about gifts made in the previous 5 years, bringing deprived assets into play. Mismanagement of asset transfers can lead to significantly higher aged care fees. For instance, a $200,000 deprived asset could add approximately $15,000 per year to aged care fees, running until the lifetime cap or the 5-year window closes, whichever is later.