Ask Noel

I'm 62 and hope to retire in July. For the next few months, can I salary sacrifice 100 per cent of my income into my wife's super since she has already retired? The plan was to save on tax and live off our savings. Any advice would be appreciated.

I'm 62 and hope to retire in July. For the next few months, can I salary sacrifice 100 per cent of my income into my wife's super since she has already retired? The plan was to save on tax and live off our savings. Any advice would be appreciated.

You cannot salary sacrifice directly to your wife's super fund. However, once a year, if the trustee of your fund agrees, you can transfer 85 per cent of your concessional contributions into your wife's super fund, as long as she is under 65. If she is 55 to 64, she must declare that she is not permanently retired from the workplace at the time of the contribution split. Take advice before salary sacrificing your entire income because your employer should be paying 9 per cent for you and total concessional contributions from all sources cannot exceed the $50,000 cap for the 2011-12 financial year. Confirm with your employer that your contract allows you to salary sacrifice and bear in mind that the first $6000 of your income is tax-free and the next $31,000 is taxed at 15 per cent concessional contributions to super lose a 15 per cent entry tax.

I have a $378,000 mortgage on my home, which is worth $440,000. I have $10,000 in a regular bank account and $5000 in my mortgage offset account. I would like to buy a car for $10,000. Also, I would like to use the equity on my home to buy an investment property in the near future. What are my options to buy a car and still have enough equity to buy an investment property?

You should be trying to maximise your deductible debt and minimise your non-deductible debt. Therefore, think about paying cash for the car with the money you have and borrowing for the investment property using the equity you have in your house as additional deposit. If you don't have enough equity at this stage, you will need to defer the additional purchase until you have reduced your home loan.

My mortgage is paid off, I have $60,000 in super and $10,000 in savings. My salary is $45,000 a year. What would be the best option for saving for my retirement as I plan to work for another 15 years?

You should be forming a relationship with an adviser, which should enable you to decide exactly when you want to retire and how much you will need when you do. The adviser should be able to suggest strategies to help you get there, which may include salary sacrificing to super and/or some small conservative borrowing.

I have been paying into a British endowment mortgage. It is finishing next year and I want to transfer the money from Britain to put on my existing mortgage. Would I have to pay tax on it?

You would certainly pay no tax on the proceeds in Australia but you should make enquiries as to what tax you would pay in Britain. To the best of my knowledge, these policies are redeemed tax free, but the fund issuer should be able to confirm this for you.

What is the position regarding the 16.5 per cent death tax if the proceeds of superannuation are left to a testamentary trust?

The commissioner would look through the estate and identify the ultimate beneficiary. If the beneficiary is a non-dependant for tax purposes, it is the duty of the executor of the estate to remit the 16.5 per cent tax to the Tax Office. If the beneficiaries are both dependants and non-dependants for tax purposes, the apportionment of the tax will depend on the type of trust. For example, if it is a fixed trust, it will clear what percentage of apportionment might occur in terms of apportioning the death benefits tax. If it is a discretionary trust, the commissioner will most likely view this as an amount that's wholly subject to tax as if it were being paid to a non-dependant. Unfortunately, the legislation is not clear on this. The onus is on the tax payer to demonstrate who the potential beneficiaries will be.

Advice is general readers should seek their own professional advice.

Contact noel.whittaker@whittaker Follow him on Twitter: @noelwhittaker. Questions to: Ask Noel, Money, GPO Box 2571, Qld, 4000, or see

My wife and I are in our 60s and are self-funded retirees. We have a self-managed super fund which is in pension phase with sufficient capital to take over the housing loans of both our married daughters. The advantages would be beneficial for all parties as we would only charge the interest we can receive on the market and would be a saving of at least 1 per cent on their loan. Also it takes our money out of the dangerous financial climate where the government will only cover $250,000 per institution instead of the $1 million cover it had. We would have legal documents drawn up for protection. Can this be undertaken by a SMSF?

The rules prohibit members of a SMSF from lending and providing financial assistance to members and relatives of the SMSF therefore, it cannot be done. Bear in mind that bank depositors rank ahead of bank shareholders. For any Australian bank depositor to lose their money it would first be necessary for all the shares in that bank to become worthless. This is highly unlikely to happen.

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