Ask Noel

My husband turned 65 this month. He is still working in the building industry and will work for as long as he can but his job could end at any time. We have two investment properties, both with interest-only loans. Unfortunately, due to the downturn we are unable to sell them. On my estimation, our loans would only just be covered if we did manage to sell, or we might have to take a loss. If my husband had to retire, are the properties counted as assets if he applies for a pension and are the loans offset against the asset? I'm concerned that the properties could be our downfall after signing up for them too late in life.

The properties will be assets for Centrelink purposes but their values will be reduced by the amounts owing. Therefore, if the debts are equal to the value of the properties, they should not adversely affect your pension. If your cash flow is tight, you should be taking steps to sell the properties in an orderly fashion now, because you do not want to put yourself in a position where the bank sells them for you.

I understood that if you earned $450 in a calendar month, you were entitled to 9 per cent of the gross in super payments. I work irregular hours at my part-time job but often reach $450 or more in a month. However, because of fortnightly pay periods, I seem to miss out quite often. For example, I worked on the 15th of the month and earned $379.50 gross, paid on the 21st. No super. I earned $302.50 on the 29th, paid on the 10th day of the following month. No super. Is it legal to not pay 9 per cent because of the pay dates?

The legislation says that if an employee earns less than $450 in salary or wages in a calendar month, the employer does not have a super guarantee (SG) liability. This rule is based on what is actually paid to you in a month. If you have earned more than $450 in a calendar month and are not receiving SG, it might be worth approaching your payroll area to ask why not. For more information, contact the Tax Office on 13 10 20.

I'm newly separated, in my 40s, with no debts but also no assets. I won't be earning much as I raise the children but I'm great at managing money so I have $25,000 in a bank account and am adding to it each month. I think I should invest in shares rather than leave it sitting in the bank. I won't be able to buy a house for many years, so I don't really have anything else to do with it. Is this the right thing to do?

I'm happy for you to invest in shares, provided you understand they are a long-term investment and you don't worry and sell them when the market has one of its normal downturns. A further benefit of Australian shares is that the dividends, if fully franked, would be tax-free for anybody earning less than $80,000 a year.

I'm 24 and earn $103,000 after tax. I've got $290,000 left on my $350,000 home loan on a $650,000 property (first home). My dad acted as the guarantor and supplied $300,000 for me to buy my first home. I make $1700 monthly repayments to my dad and $2200 to my bank. I've no other debts. When do you know it is the right time to buy an investment property? Are there any golden rules to follow when taking out additional investment loans?

There is an old saying: "There is never a better time to make a good investment," so I think your focus should be on finding an undervalued property in a growth area. Keep in mind that the land content is far more important than the state of the building. The golden rule in taking out an investment loan is to keep that loan strictly separate from your housing loan. This is because the interest on the investment loan is tax deductible but the interest on your home is not.

I am 58 and my wife is 56. We have super balances totalling $1.3 million, as well as $350,000 in managed funds, $100,000 in direct shares and $300,000 in cash. Due to health issues, we are planning to retire in the next few months. Should we live off the cash for four or five years before accessing super or put the cash into super and wear the tax liabilities that come from accessing super before 60?

Keep in mind that you can each withdraw a tax-free $165,000 of the taxable component of your super before you turn 60, when all withdrawals become tax-free. Obviously, you should be taking advice but it seems to me that if you both made large non-concessional contributions to super, you would substantially reduce the taxable component of any withdrawals you make. An alternative is to make non-concessional contributions to a separate super fund, in which case, the only taxable portion would be the earnings on those contributions.

Advice is general readers should seek their own professional advice.

Contact

noel.whittaker@whittaker macnaught.com.au. Follow him on Twitter: @noelwhittaker. Questions to: Ask Noel, Money, GPO Box 2571, Qld, 4000, or see moneymanager.com.au/ask-an-expert.