By The Chipkie Team, Personal Finance Editorial Team · Last updated 18 August 2026
If your parents are helping you into your first home, the lender will ask one blunt question: is this money a gift or a loan? Your answer has to be in writing, and a gifted deposit letter is how it gets documented. Get it right and settlement moves along quietly. Get it wrong — or misdescribe a loan as a gift — and the application can be declined outright, or worse.
Australia has no gift tax and no inheritance tax, so the drama here is not with the Australian Taxation Office. It sits squarely with mortgage lenders, who are obliged under responsible lending rules to understand exactly where your deposit came from and what you owe on it.
Key Takeaways
- A gifted deposit letter (often a statutory declaration) confirms the money is a genuine gift with no obligation to repay and no claim over the property.
- Australia has no gift tax and no inheritance tax, so a parental gift is not a taxable event for either party.
- If the money is really a loan, it must be disclosed as a liability — signing a gift letter to hide a loan is fraud, not paperwork tidying.
- Most lenders also want the funds seasoned in your account, and many require evidence of genuine savings on top of the gift.
- Centrelink gifting limits are a social security rule, not a tax rule: $10,000 per financial year and $30,000 over five financial years for means-tested payments such as the Age Pension.
What is a gifted deposit letter and why do lenders demand one?
A gifted deposit letter is a signed statement from the person giving the money confirming the amount, the relationship to the buyer, that the funds are non-repayable, and that the giver retains no legal or beneficial interest in the property. Lenders require it to verify the source of deposit funds and to confirm no hidden debt exists.
Under the National Consumer Credit Protection Act 2009, credit providers must assess whether a loan is unsuitable for you. That assessment depends on knowing your true liabilities. An undisclosed $80,000 family loan with repayments attached destroys the accuracy of that assessment — which is precisely why lenders will not simply take your word for it.
Most lenders require the letter in a specific form. Many accept a bank-branded template; a large number now insist on a statutory declaration witnessed by an authorised witness (a JP, solicitor, pharmacist, police officer or similar) under the Commonwealth Statutory Declarations Act 1959 or the equivalent state legislation.
What a lender typically wants stated:
- Full name and address of the giver, and their relationship to you
- The exact dollar amount and the date it was or will be transferred
- An unambiguous statement that the gift is unconditional and not repayable
- Confirmation the giver has no interest in, or claim over, the property
- Confirmation the giver will not be living in the property (some lenders)
- Signature, date, and witness details where a statutory declaration is required
Is your money actually a gift or a loan for a house deposit?
It is a gift only if nobody expects repayment, ever, in any form. If there is a repayment schedule, an informal understanding that you will “pay it back when you can”, or an expectation the parents get their money out on sale, it is a loan. Loans must be disclosed to the lender and are assessed as a liability.
This is the single most common problem we see. Families intend a loan but call it a gift because they have heard gifts are easier. Our experience with the agreements our users create shows the opposite is true: undocumented “gifts” that everyone privately treats as loans cause the worst outcomes — at settlement, at refinance, and especially in a relationship breakdown or a deceased estate.
| Feature | Genuine gift | Family loan |
|---|---|---|
| Repayment expected | No, never | Yes, on agreed terms |
| Lender treatment | Counted as deposit | Counted as a liability, reduces borrowing capacity |
| Document required | Gift letter or statutory declaration | Written loan agreement, disclosed on application |
| Effect on serviceability | None | Repayments reduce surplus income |
| Protected if you separate | No — becomes part of the pool | Better protected as a documented debt |
Some lenders will accept a documented family loan as part of the deposit provided the repayments are included in servicing; others will not accept borrowed funds toward a deposit at all and will refuse the application outright. Policy varies, so ask the broker before the money moves. If a loan is the honest answer, a properly drafted family loan agreement is what you need, not a gift letter.
What makes a gifted deposit declaration false, and what happens then?
A gift letter is false the moment it states the money is non-repayable while a repayment expectation actually exists — written, verbal or merely understood. Signing a false statutory declaration is a criminal offence, and obtaining credit on false information is fraud. Consequences include declined or rescinded approval, loan recall, and referral to authorities.
Specific risks worth being clear-eyed about:
- Criminal exposure: knowingly making a false statutory declaration is an offence under the Statutory Declarations Act 1959, punishable by imprisonment.
- Fraud provisions: misrepresenting your financial position to obtain credit can also breach state criminal law and the lender’s own mortgage terms.
- Loan default clauses: most mortgage contracts allow the lender to demand full repayment if the application contained false statements.
- Complaints won’t save you: the Australian Financial Complaints Authority cannot assist a borrower who supplied false information.
The honest path is always available. Disclose the loan, accept the reduced borrowing capacity, and if the numbers no longer work, look at other structures such as a smaller purchase or a documented arrangement under the 5% deposit scheme with family support.
How do you prepare a gifted deposit letter and satisfy source-of-funds checks?
Draft the letter early, transfer the money into the buyer’s own account well before application, and keep a clean paper trail. Lenders want the funds visible in the borrower’s account, usually for at least three months, plus statements showing where the money came from before it was gifted.
- Confirm lender policy first. Ask your broker whether a bank template or a witnessed statutory declaration is required, and how long funds must be seasoned.
- Have the giver document their own source. If the gift came from an offset account, share sale or downsizing proceeds, keep the evidence. Anti-money-laundering obligations make unexplained lump sums a red flag.
- Transfer in one clean payment. Avoid cash deposits and avoid routing money through third parties.
- Season the funds. Many lenders still want evidence of genuine savings — typically 5% accumulated over three to six months — separate from the gift.
- Sign and witness the declaration. Use an authorised witness; unwitnessed declarations get bounced.
- Deal with tax and Centrelink questions separately. There is no gift tax in Australia, but check the ASIC MoneySmart guidance and, for pensioners, the gifting limits below.
A note for pensioner parents: Services Australia treats gifts above $10,000 in a financial year, or $30,000 across five financial years, as a deprived asset that remains assessed for five years. That can reduce an Age Pension. It is a means-testing rule only — not a cap on how much you may legally give. If this is your situation, read our guide on using pension savings toward a house deposit.
Does a gifted deposit need to be a statutory declaration?
Not always. Some lenders accept a signed letter on their own template. Others require a statutory declaration witnessed by a JP, solicitor or pharmacist. Because policy differs by lender and can change, confirm the exact requirement with your broker before the giver signs anything.
Do I pay tax on a gifted house deposit in Australia?
No. Australia has no gift tax and no inheritance tax, so neither the giver nor the receiver pays tax on a cash gift. The Australian Taxation Office may take interest if the gift generates income, or if the giver disposed of an asset triggering capital gains tax to fund it.
Can my parents get their money back later if it was a gift?
Not reliably. Once documented as an unconditional gift, there is no enforceable right to repayment. If parents want their money returned one day, it is a loan and must be documented and disclosed as one. Rewriting history after settlement rarely succeeds in court.
Will a family loan reduce how much I can borrow?
Yes. Lenders include family loan repayments in serviceability calculations and stress-test them, just like any other debt. A $500 monthly repayment can reduce borrowing capacity by tens of thousands of dollars. Some lenders will not accept borrowed funds as deposit at all.
Where to from here?
The decision is not really about paperwork — it is about honesty. Decide with your family whether the money is a genuine gift or a loan, then document it that way and tell the lender the truth. A gift letter for a gift; a written agreement for a loan.
If repayment is expected, don’t leave it to a text message and good intentions. You can create a clear, written family loan agreement in minutes with Chipkie — so everyone knows the terms, and your lender gets the accurate picture the law requires.
Disclaimer: The information provided in this article is for general informational purposes only and does not constitute financial, legal, or tax advice. Australian laws and lending criteria vary by state and territory and may change. Always consult a licensed financial adviser, solicitor, or conveyancer before entering into any financial arrangement or property purchase with another party.
