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I am 56, have $400,000 in superannuation and work full time. My husband, 67, has $150,000 in super. He runs a home business that currently earns only a small income. We have $130,000 in the bank and have just sold our house for $1 million. We intend to downsize and repurchase in two years time, hopefully when property prices are lower. What is our best strategy while we wait to see what the property market does? Should I be salary sacrificing all my work income and contributing a lump sum to my ...

I am 56, have $400,000 in superannuation and work full time. My husband, 67, has $150,000 in super. He runs a home business that currently earns only a small income. We have $130,000 in the bank and have just sold our house for $1 million. We intend to downsize and repurchase in two years time, hopefully when property prices are lower. What is our best strategy while we wait to see what the property market does? Should I be salary sacrificing all my work income and contributing a lump sum to my husband's super to minimise tax?

For a term as short as two years at the most, the only place for your savings is one of the high-interest accounts offered by the major banks. Certainly, salary sacrifice to the maximum on your own income, keeping in mind that the total amount that can be contributed as a concessional contribution is $50,000 a year, including the employer contribution. There is no point in your husband salary sacrificing to super if he has only a small income but he could make a non-concessional contribution of $1000 with the aim of collecting the government co-contribution. As he appears to have passed the work test and lack of access is not a problem due to his age, by all means place surplus funds in super for him.

We are both 64. I am retired on $46,000 a year on a public service pension and have $42,000 in superannuation. We have $71,000 in savings and $48,000 in shares. My wife is still working part-time and has $420,000 in super. Should we move any surplus funds into my wife's super or mine? Or should we leave as is? We are not comfortable with risk in retirement and will use her super fund for an allocated pension when my wife retires.

In view of your income it would make sense to hold as much money as possible in your wife's name. When she retires she could then start an account-based pension, which means her superannuation will be held in a tax-free account while she is drawing a tax-free income.

I have a home-saver account and one of the reasons I got it was that interest earned in the account is taxed at only 15 per cent, which is lower than my marginal tax rate. Is the government still going ahead with its proposal to allow taxpayers to earn up to $1000 in interest tax free and, if so, what are the implications for the home-saver account? Will 15 per cent tax on interest earnings still be taken out each month as currently happens?

The intention was not to allow people to earn $1000 tax free but to give them a discount of 50 per cent on the first $1000 of interest earned. The intention is to start the system on July 1, 2012. I don't see it affecting the home-saver account because its main benefit is the tax-free 17 per cent you can get each year on the first $5000 deposited.

If a couple buy their first home and decide to rent out part of the house to help with the mortgage, would they have to declare that income? If so, could they partially negatively gear their loan proportionately with the area rented out?

Be extremely careful about renting out part of your property because you could lose part of the capital gains tax exemption and also find yourself liable for land tax. However, if you take in a boarder and that board is purely used to assist with outgoings there would be no tax effect because the board would not be assessable and you would not be able to claim any tax deductions.

Noel Whittaker AM is a co-founder 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.


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