The gift that bites back: Financial expert warns on gifting shares to kids

With the cost of living rising and many adult children struggling to get ahead, it's natural for parents to want to help, often by gifting assets like shares.  Leading financial expert and founder of respected advisory AJ Financial Planning, Alex Jamieson is warning older Australians that gifting shares, even with the best intentions, can trigger serious financial consequences including tax bills and pension penalties.
 

"Parents want to give their children a leg up, but they may be unaware that gifting shares can create a Capital Gains Tax (CGT) event, even if no money changes hands," Jamieson said. 
 

"Critically, if you are on the Age Pension, you could also fall foul of Centrelink's gifting rules, resulting in your assets being counted for longer than you expect which could reduce your pension payments."
 

The gift that bites back: tax and Centrelink traps
 

When you gift shares, the Australian Tax Office treats the transaction as if you sold them at market value. That means any gain on those shares could trigger CGT, payable by the parent.
 

"If you bought the shares years ago and they've increased in value, that growth becomes taxable at the time you give them away," Jamieson explained.
 

"You don't avoid tax just because you didn't pocket any cash."
 

For retirees receiving the Age Pension, the trouble doesn't end there. Centrelink imposes strict gifting limits; $10,000 per year and $30,000 over five years. Go above that and the excess continues to be assessed as part of your asset base, reducing your pension entitlements.
 

"This is called the 'deprivation rule' and many people don't realise it exists," Jamieson said.
 

"Even if you no longer have the shares, Centrelink still treats the excess value as if you do. That could mean less pension for years."
 

Helping without hurting: why advice matters
 

Jamieson said there are smarter ways to help children financially, but only if you get personalised advice.
 

"There may be more tax-effective ways to transfer wealth or alternative strategies like family trusts, loans with conditions or structured gifting over time," he said.

"What matters is understanding the full picture before acting. A good financial plan balances generosity with long-term protection of your own position."
 

Don't act on emotion, act with strategy
 

Jamieson urged families to talk to a licensed advisor before making significant gifts.
 

"The impulse to help is admirable but the consequences can be complex. You could jeopardise your retirement income, your aged care affordability or even create family tension down the line," he said.
 

"Gifting shares is not just a kind gesture, it's a financial transaction with real implications. Think it through, get advice and make sure you're not hurting yourself in the process of helping others."
 

About Alex Jamieson

Alex Jamieson is the founder of Melbourne-based advisory firm, AJ Financial Planning. With a firm belief in responsible investing, Alex crafts investment portfolios for clients that not only meet their financial objectives but are also sustainable and match their ethical values.

A highly respected financial advisor, Alex is considered one of the country's leading experts on all matters financial planning, investing and retirement.

http://www.ajfp.com.au/