Goldsborough logo

Creating wealth between generations

Creating wealth between generations

Recently I wrote about how parents can help their adult children buy property.

Continuing the theme of parents helping adult children, I wanted to explore an example of how a financially well-established 70-year-old couple provided financial assistance to their (also well-established) 30-something daughter.

Before I run through this example, there are home truths about parents helping adult children that need to be mentioned.

  1. Most parents want the best for their children and grandchildren; however, parents are not obligated to buy their kids a house or provide any financial help to adult children at all.
  2. Undue pressure from children to provide financial support is financial abuse and should be treated seriously.
  3. Everyone’s financial position is unique, as are their views on money.
  4. Parents and their adult children have a lot to gain from an open and mature dialogue about financial matters.

Helping adult kids is not everyone’s main priority, but this example highlights how there can be a benefit on both sides. This scenario is based on a discussion I had recently.

Parents: Josh and Tina are aged 70.

  • They own their own home at $1.5m and plan on downsizing someday in the future.
  • $800,000 in Account-Based Pension.
  • Centrelink assets test of $900,000.
  • Annual Income:
    • $30,000 from Tina’s government-guaranteed superannuation pension
    • $40,000 from Josh’s account-based pension
    • $1,190 part Age Pension (assets test)

Daughter: Amy age 35

  • Home of $600,000 with a loan of $300,000.
  • Amy works as a marketing professional earning $100,000
    • less $29,500 tax
    • less $2000 per month loan repayment
    • leaving approx. $46,000 per year for living expenses.


Josh and Tina are considering a gift of $10,000 to Amy and think this could help their Age Pension position. They know that Amy doesn’t make extra contributions to super although her parents would like her to. What if Josh and Tina gave $10,000 to Amy to put into super?

Centrelink benefits to Josh and Tina:

  • Centrelink allows gifts of up to $10,000 per financial year (up to $30,000 over 5 years to reduce the asset test).
  • The $10,000 reduction in assets gives $30 per fortnight (or $780 per year) in extra Age Pension.

Tax benefit to Amy:

  • Amy can claim her $10,000 super contribution as a tax deduction.
  • $1,500 tax is deducted by the super fund (15%).
  • $3,450 is returned to Amy once she lodges her tax return (34.5% tax rate including Medicare Levy).
  • $3450-$1500=$1950 of net tax savings

Amy has an extra $3450 in her pocket and $8,500 in her super fund. The transfer of $10,000 and super contribution has saved $1,950 in tax and added $780 per year in extra Age Pension for the “family group”.

Financial Planners do ask a lot of questions. Sometimes we ask questions about family to kick-start a conversation. So, here are some questions to get you started.

  1. Who’s in your family group?
  1. What’s your financial relationship with those people?
  1. Are you talking with your family group about money?
  1. How do you feel about helping those in your family group create wealth?



The example above is not intended to be advice and acted upon but rather demonstrate the benefits of financial planning.  Please seek professional financial advice relating to your own unique circumstances.

Director | Certified Financial Planner ® | B.Ec, Grad Dip FP | Authorised Representative No. 227293

You might also be interested in…

With the end of the financial year quickly approaching, now is the perfect time to review your superannuation contributions with your adviser!
A government task force looking into the aged care sector in Australia has recommended that those of us with the financial means should pay for our own living and accommodation costs. This would be a substantial change to what currently happens. Currently, the taxpayer covers most of the expenses for aged care – around 75% of residential care costs and 95% of in-home care costs.