I am 64, self-employed, bringing in $30,000 a year. My wife is 60, working part-time, earning a similar figure, and will probably stop working soon. I have $300,000 in a superannuation pension fund paying the minimum and $150,000 in a super fund. My wife has $140,000 in a super pension fund paying the minimum and $20,000 in another super fund. I've been advised to move some or all of my assets (super) into one of my wife's accounts for Centrelink purposes before I turn 65. My thinking is to close my pension fund and move the full amount into one of my wife's accounts. Can I move the money to her pension fund, and what do I gain by keeping the $150,000 in super? Should I move it to a term deposit to give me access to cash? Apart from our house, which has no mortgage, we have minimal assets.
Your wife's pensionable age is 65, so moving super to her name will shelter it from Centrelink until she attains that age. You cannot transfer your super to her account but once you reach 65 you can withdraw as much as you wish tax free and gift it to her. She could then contribute that money to her own super account up to her relevant after-tax (non-concessional) cap. If you wish to withdraw before age 65 you will need to trigger a "condition of release", which means resigning from a job. There is no hurry to do anything before you're 65 because gifts between spouses do not count as deprived assets for Centrelink purposes. You should have sufficient liquidity while you are working. Once you stop you will have access to your super.
I am 56 and retired on a $50,000-a-year indexed pension plus $310,000 in super. My wife is 51, not working and has $300,000 in term deposits and $30,000 in super. We own our home and will be selling a joint investment property with a capital gain of $75,000 each. To reduce capital gains tax (CGT) is it possible to make a concessional contribution to our super, which this financial year is a maximum of $50,000. Does this mean we would pay CGT on the remaining $25,000 each?
CGT is calculated by adding the gain, after adjustment, to your taxable income in the year the sales contract is signed. A tax-deductible contribution of $50,000 each would mean the effective amount that could be added to your income in that financial year would be $25,000. Take advice to ensure you are eligible to claim a tax deduction and make sure you do not exceed the concessional (pre-tax) contribution cap, which is $50,000 for the 2011-12 financial year. In the absence of any amending legislation the $25,000 cap will apply to everyone from July 1.
I am 44, living overseas, and do not see myself returning to Australia soon, if at all. I have $180,000 in superannuation and would prefer to manage the money myself as I live in a tax-free country with more choice internationally on how my money is invested. Can I get my superannuation money released or invest in a trust that invests 100 per cent in overseas cash and shares?
Under the current rules you cannot withdraw the funds until you reach your preservation age 60 for anybody born after July 1, 1964 and then declare retirement or reach age 65. However, provided your super fund has the appropriate option available, you could invest in an international fund of your choice within the fund. If your present fund does not offer this option you are free to roll your funds into another Australian-based superannuation fund that does.
My husband and I bought a house five years ago for $310,000. Its estimated current value is $350,000 with a mortgage of $150,000. We lived in the house for four years and have rented it for one year. Current rent is $390 a week. We live with our parents until we decide on our next step. We would like to live closer to work but this may have implications, such as stamp duty on the next purchase and capital gains if we sell the property we own. Would it be best to move back into the house to allow us to save on rent and possibly not have to pay capital gains tax when we sell? We are in our early 30s and thinking of starting a family soon.
Provided you are not claiming any other property as principal place of residence, you can be absent from this property for up to six years without losing the CGT exemption. You have five years to make a decision about moving back into it or selling it.
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.
I am 62 and have shares worth $180,000. If I retire before 65, sell all the shares and contribute the proceeds to super, can I claim that as a tax-deductible contribution? Do I need to pay capital-gains tax from the proceeds?
The amount you can claim as a tax deduction is limited and may well be just $25,000 a year when you retire. Also, in most cases you cannot claim a tax deduction for your own contributions if an employer is paying super for you. You will certainly have to pay capital gains tax if there is a capital profit, but the beauty of shares is that you can sell them in small parcels to minimise any tax. You may find it is simpler to draw down on the shares after you retire.
Frequently Asked Questions about this Article…
Can I move my superannuation into my spouse’s account to reduce my assessable assets for Centrelink?
You cannot directly transfer your super balance into your wife’s super account. The article explains that gifting or moving money between spouses doesn’t count as a deprived asset for Centrelink, so there’s no rush to do anything before you turn 65. Once you reach 65 you can withdraw your super tax-free and then gift it to your spouse, who could then contribute it to her super up to her after‑tax (non‑concessional) cap.
Will moving my super to my wife’s name shelter it from Centrelink until her pensionable age?
If your wife is under her pensionable age (the article’s example: 65), having funds in her name can keep them outside your assessable assets for Centrelink until she reaches that age. But you can’t transfer your super directly; the practical route is withdrawing tax‑free at 65 and gifting, subject to non‑concessional caps and eligibility rules.
Can I withdraw my superannuation before I reach age 65 and what is a condition of release?
You can only access preserved super once you reach your preservation age and meet a condition of release (for example, retirement). The article notes preservation age depends on date of birth (for people born after 1 July 1964 the preservation age is 60) and that to withdraw before 65 you usually must trigger a condition of release such as resigning from paid employment.
Should I move money from super into a term deposit to give myself better access to cash?
The article suggests there’s no urgent need to move super into other vehicles while you are still working because you should have sufficient liquidity from income. If you stop working and meet a condition of release, you’ll then have access to your super. Moving super into a term deposit inside or outside super should be considered only after checking withdrawal rules and your access needs.
Can I use concessional super contributions to reduce capital gains tax when I sell an investment property?
Yes — making tax‑deductible (concessional) contributions can reduce your taxable income in the year the CGT event occurs. The article’s example shows if each owner has a $75,000 gain and makes a $50,000 concessional contribution, the effective amount added to taxable income would be $25,000 each. You must ensure you’re eligible to claim the deduction and don’t exceed the concessional cap.
What are the concessional (pre‑tax) contribution caps mentioned and could they change?
According to the article, the concessional cap for the 2011–12 financial year is $50,000. It also notes that, in the absence of amending legislation, a $25,000 cap will apply to everyone from 1 July. Always check current rules and seek advice because caps and effective dates can change.
I live overseas — can I withdraw my Australian super or invest it entirely in overseas shares and cash?
You generally cannot withdraw preserved super until you reach your preservation age and meet a condition of release. However, you can invest in international assets through your Australian super fund if the fund offers international investment options. If your current fund doesn’t offer the option you want, you may roll your balance into another Australian super fund that does.
If I sell shares and contribute the proceeds to super, can I claim a tax deduction and avoid capital gains tax?
You may be able to claim a tax deduction for some personal contributions, but the deductible amount is limited (the article suggests it may be around $25,000 a year when you retire) and you often can’t claim a deduction if an employer is paying super for you. Capital gains tax will apply if there’s a profit from selling shares, though you can sell in smaller parcels to spread or minimise CGT. The article also notes it can be simpler to draw down on shares after retirement.
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