My father is 95, a widower, and no longer able to live in the family home. He lives with us, and that is going very well. Rather than see the house fall into decline, he has decided to sell it, which we think is a good idea. He then said he wishes to share the proceeds equally among the four children before he dies, partly to stave off a potential problem with one of the four of us, who may prove difficult. Is he allowed to do this? What are the tax implications for him and us? I would estimate each share to be in the vicinity of $150,000 to $200 000.
If it has been his residence it should be able to be sold free of capital gains tax (CGT). There is no gift duty in Australia so the proceeds can be gifted as your father thinks fit. The major factor to consider is what will happen with Centrelink if he is on benefits – he will become a non-homeowner but the proceeds will be a deemed asset for five years which would almost certainly mean he’d lose all his benefits. Of course, if he is not receiving benefits, this is not an issue. It may be worthwhile talking to a solicitor about the way to frame the gifts – possibly it may be better to treat them as some kind of loan, but this would have implications for Centrelink in five years as the asset would still exist for pension assessment purposes.
Recently you outlined how the new rules will apply to superannuation balances over $1.6 million – can you please explain what happens if a couple each have $800,000 in super assets and one party dies? Does the surviving spouse end up with $1.6 million in pension mode, or does the $800,000 have to be placed in accumulation mode or withdrawn?
A person is allowed a life time cap of $1.6 million in pension mode. Therefore, if the survivor was the reversionary beneficiary, the $800,000 could be paid to them and held in pension mode. It could also be cashed out and held in the personal name of the survivor.
I am currently receiving a small, part age pension and I rent an apartment. As such I am a non-homeowner receiving rent assistance. An opportunity has arisen for me to buy my own apartment and become a homeowner. If I pay a deposit and sign a contract to settle in 90 days when will Centrelink reclassify me as a homeowner? When I pay the deposit or when I settle the contract in 90 days?
Department of Human Services General Manager Hank Jongen advises that if the property is your principal home, you will be reclassified as a homeowner on the day the contract is settled. If the property is not your principal home, it will be assessed as an asset from the date of settlement until the date it becomes your principal home and you are reclassified as a homeowner. The deposit will be assessed as an asset from the date it is paid.
If I transfer shares from my name to joint names with my wife in an off-market transaction am I liable for CGT based on the total increase in value or on 50 per cent of that total given that that could be a reasonable assessment of the actual asset shift.
As your wife effectively owns 50 per cent of the shares now your capital gains tax would be based on 50 per cent of your holding and provided the shares were held for more than a year you get a further 50 per cent discount. Just take advice before you make the transfer – I am unsure what you would gain by this strategy. Keep in mind that the shares will pass to your wife on your death anyway with no CGT payable until she disposes of them.
I’m a PSS defined benefit member. I contribute roughly $9000 in after-tax money to my fund which is the maximum I can contribute (10 per cent). Do the super changes effective from July 2017 mean that I will be able to claim these contributions as a deduction in my personal income tax return for the 2018 financial year?
Yes, the new rules means anybody can claim a tax deduction for personal contributions up to the cap after June 30.
Noel Whittaker is the author of Making Money Made Simple and numerous other books on personal finance. His advice is general in nature and readers should seek their own professional advice before making any financial decisions. Email: [email protected]苏州美甲学校网苏州美甲学校论坛.