I turned 65 in 2005 and bought a Term Allocated Pension (TAP) for $150,000. The government encouraged investors by allowing a 50 per cent reduction in the assets test of the amount invested. However, a short time later they changed the rules and I went from the assets test to the income test. Because of the financial crisis I have been allowed to withdraw an amount below what the rules specify. As soon as that concession ends I will be forced to take ever-increasing amounts and will lose half of my Centrelink payments in excess of the non-assessable amount.
Is there any way to change to an allocated pension or to withdraw my money entirely? Centrelink has said penalties, if any, would be minimal as I was on the assets test for such a short time; the ATO says it's not up to them; and my TAP provider says I cannot be released from the contract.
There are limited circumstances in which this type of income stream can be commuted, and they do not apply in your case - financial hardship is not an exception. It may be possible to roll it over to another complying income stream but you would need to take expert advice first. It could result in you losing the 50 per cent asset test exemption, but it may enable you to get more favourable treatment under the income test.
I am 61 and started a self-managed super fund in 2003. I would like to terminate my SMSF, and return everything back to my name. My accountant tells me I will have to retire if I want to close my super, but the costs are too high to run the SMSF. Is there a solution?
You cannot withdraw the money from superannuation at age 61 unless you trigger a condition of release. However, a simple way out may be to roll the balance into a retail fund. Take advice, because it may be necessary to cash in your fund's assets before the balance is rolled over, and capital gains tax could be payable unless you are in pension phase. If you are not in pension phase now you could start a transition-to-retirement pension which would put you into pension phase. Expect to pay around $3300 to wind up your own fund.
Noel Whittaker is the author of Making Money Made Simple and numerous other books on personal finance. His advice is general in nature. Readers should seek their own professional advice before making decisions. Email: firstname.lastname@example.org.
My mother passed away this year, leaving a parcel of Westpac shares to her grandchildren. They would like to find out the capital gains tax applicable. She acquired the shares in the days of St George Building Society and I, as executor, have not been able to locate any original share certificates that would help me estimate the original cost base. Some of the shares would have been granted to members of the building society, some as dividend reimbursements and others were bought about the early 1990s. If the shares were sold, how would you calculate the CGT in the absence of any personal records?
Your problem is not uncommon. Julia Hartman, the co-author with me of Winning Property Tax Strategies, states that she has seen the Tax Office take a fairly lenient approach on this and allow the cost base to be the market value at the date of death even though they are post-1985 shares. (Any shares your mother acquired before September 19, 1985, will be inherited at a cost base of market value at the date of her death anyway.) The secret is to be up front with the Tax Office right from the start and write to them and ask for their advice. List the shares held and make sure you get a written reply.