I'VE read that self-funded retirees may not be aware that they qualify for the Commonwealth Seniors Health Card (CSHC) because it is linked to taxable income, rather than the complicated income calculation used by Centrelink to calculate benefit payments. Are we eligible for the card? My wife and I are younger than 65 and we are still working 16 hours a week with a combined income below the $80,000 a year eligibility threshold.
The CSHC card is available to those who are of age-pension age, which is 65 for males and 64.5 for females. No assets test is applied but eligible applicants must have an Adjusted Taxable Income (ATI) of less than $50,000 for singles and $80,000 for couples. ATI is described as the income you would pay tax on, for example bank interest and dividends. It also includes reportable fringe benefits and reportable employer super contributions. Account-based pensions do not count towards the $80,000 as they are not taxable if you are 60 or over. Keep in mind that a person may have a taxable income even if they are not required to lodge a tax return. If both of you are not yet of age pension age you may qualify for the low-income health card.
I'm 51, single, earn $90,000 and pay $250 a week rent. I've $400,000 in super and salary sacrifice about $36,000 a year. Almost all my money is in shares valued at about $1.2 million. I have $40,000 in cash. I will inherit a small home in Britain sometime in the near future and could live there during my retirement. I'm considering selling some or all my shares and buying a house or unit in Sydney (mortgage free) but my gut feeling is that the property market is overvalued and in for a fall and that the share market is likely to produce better returns. Also, as I'll soon turn 52, instead of keeping the shares in my own name should I sell some, pay the capital gains and then buy shares through a self-managed super fund?
As you are a direct share investor a self-managed super fund may well be appropriate for you. Only you can decide whether the property market is overvalued in the area where you wish to buy but my belief is that it is always worth buying a bargain if you can find one. Just make sure that any capital-gains costs incurred in moving the money to super do not exceed the gains you make by saving tax.
My wife and I recently sold an investment block of land for $200,000. When we bought it in 1990 we combined the cost under our existing home loan. Can we claim any interest on that loan as expenses for capital gains tax and, if so, how would we work that out?
Unfortunately, as the property was acquired before August 20, 1991, you cannot claim interest but you can claim purchase costs and of course deduct the selling expenses from the gross sale price.
How can I know the exact balance of my super to tell if I'm above or below the $500,000 cut-off on super concessional contribution? I'm over 50 and belong to the government's defined benefit scheme. Looking at my statement, it doesn't say what my super balance is at a given time. Accumulation funds provide you with an exact balance as of today.
Unfortunately, we don't have the legislation yet and we don't know how this provision will apply to interest in defined benefit schemes. The government could propose methods to calculate notional interest or could provide an exemption. Until the release of the actual draft legislation, I guess anything is possible.
Noel Whittaker is a director of Whittaker Macnaught. Advice is general and readers should seek their own professional advice. Contact noel.whittaker@whittaker macnaught.com.au.
Questions to: Ask Noel, Money,
GPO Box 2571, Qld, 4000,
or see moneymanager.com.au/ask-an-expert.
Frequently Asked Questions about this Article…
Who is eligible for the Commonwealth Seniors Health Card (CSHC)?
The CSHC is available to people who have reached age-pension age (65 for men and 64.5 for women) and whose Adjusted Taxable Income (ATI) is below the thresholds — less than $50,000 for singles and less than $80,000 for couples. There is no assets test, but ATI (see below) must meet the limit.
What counts towards Adjusted Taxable Income (ATI) when checking CSHC eligibility?
ATI is essentially the income you would pay tax on: bank interest, dividends and similar taxable income. It also includes reportable fringe benefits and reportable employer super contributions. Note that account-based pensions don’t count towards the $80,000 couple threshold if you are 60 or over.
If my partner and I are under pension age but have low combined income, can we get a health concession card?
If you are not yet of age-pension age you aren’t eligible for the CSHC, but you may qualify for a low‑income health card if your combined income is low enough. The CSHC itself is restricted to people at age‑pension age who meet the ATI tests.
I’ve got a large share portfolio — should I sell shares to buy a mortgage‑free Sydney property or keep investing in shares?
Only you can decide whether local property is overvalued. The article suggests it’s usually worth buying a genuine bargain if you find one, but if you believe shares will deliver better returns you may prefer to stay invested. Also weigh transaction costs, tax consequences and your personal goals before selling.
Would a self‑managed super fund (SMSF) be appropriate if I invest in direct shares?
For a direct share investor an SMSF may well be appropriate, according to the article. However, consider the costs and the tax implications of moving assets into super — for example, any capital gains realised when selling shares to contribute to super should not exceed the tax savings you expect to achieve.
Can we claim interest on a loan used to buy investment land bought before 20 August 1991 when calculating capital gains tax?
No. If the property was acquired before 20 August 1991 you cannot claim interest as a cost for capital gains tax. You can, however, claim the original purchase costs and deduct selling expenses from the gross sale price.
How can I find the exact superannuation balance to check whether I’m over the $500,000 concessional contribution cut‑off if I’m in a defined benefit scheme?
Accumulation funds show an exact balance as of today, but for defined benefit schemes the article says the legislation is not yet released and it’s unclear how the rules will apply. The government might prescribe a method to calculate notional interest or exempt certain defined benefits — until the draft legislation appears the exact approach is unknown.
Where can I get personalised advice or contact the author of the article?
The article notes Noel Whittaker is a director of Whittaker Macnaught and that the column provides general advice only; readers should seek their own professional advice. The article lists contact details: noel.whittaker@whittaker macnaught.com.au, Ask Noel, Money, GPO Box 2571, Qld, 4000, or see moneymanager.com.au/ask-an-expert.
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