Pedestrians walk past posters advertising home loans at a National Australia Bank branch in Sydney, February 16, 2016. National Australia Bank, the country's No. 1 lender by assets, on Tuesday reported an 8 percent rise in first-quarter unaudited cash profit on better lending volumes and stronger results from its wealth division. Reuters/Jason Reed

An aged pensioner's pension has been cut from $316 to $99 a fortnight after helping his kids with a deposit to buy their first home. It was nearly 70 percent slashed from his regular pension. The pensioner said that he fulfilled his promise to his wife that he would help his three children with a deposit for their first home.

The pensioner has also decided to follow the advice of Prime Minister Malcolm Turnbull to shell out to help his kids to buy their first home, who were locked out of the housing market. However, he exceeded the maximum amount of $30,000 that can be gifted in a five-year period. The $60,000 trust fund he had has pushed him over the prescribed limit. Based on Centrelink's policy he could have earned nearly $6,000 in interest on that money.

The excess amount was determined to be a deprived asset which is subjected to deeming provisions. Deeming is a fair way for the government to assess income from financial investments including gifts. The pensioner said that Centrelink deemed his investments money that he could have kept and put away for his own future.

Partner and senior adviser at Jacaranda Financial Planning Brett Stene said that the story was unfortunate but it helped other parents to know the rule. He emphasised that the gifting rule of Centrelink is very clear and parents should be careful on the assets they gave to their children.

Spokeswoman for Social Services Minister Christian Porter said that the gifting rules helped in identifying the right target of the pension. She said that it would be difficult to make judgments for the exemptions from the gifting rules. She added that gifting rules were applicable to make gifts to charitable organisations and donations to churches but the pension income and assets would be taken into account.