Ask Noel

Under what circumstances can you earn interest from cash in the bank and not pay tax on the interest?

There are various ways that people can earn interest and pay no tax. For starters, there is no tax to pay if you earn less than $18,200 a year. Also, if a person qualifies for the senior and pensioner tax offset, they can earn $32,279 a year without paying tax, rising to $57,948 for a couple. Many retirees pay no tax because their main income is often a pension from their super fund, which is tax-free once they reach 60.

I have some shares left in company A, which were purchased by company B. At the time, they were offering three shares from company B for one share of company A. It's been five years and company A has been delisted, while company B has changed its name but is still trading. The question is: am I still eligible for anything?

I cannot give you an answer without details of the company involved. I suggest you talk to your stockbroker and ask him or her to investigate on your behalf, or talk to the share registry of the company that is still trading.

I have an investment-linked insurance bond that is due to mature after 25 years. I plan to move the proceeds to a term deposit. Is there any tax payable when this happens? Would you agree that over 25 years, the bond has been a poor investment?

There should be no tax on the proceeds, but I cannot comment on whether or not it has been a good investment without knowing the sum invested and what the net proceeds will be. The Australian sharemarket has averaged 9.1 per cent a year over the past 25 years, so an investment-linked bond should have given you a very good return. Maybe it's worth talking to the person who recommended the investment in the first place.

I recently sold a block of land and was left with $6000 after paying out the loan. Do I only pay capital gains tax on the $6000, or the actual difference between the purchase price and the sale price?

You will pay capital gains tax on the difference between the net sale price and the adjusted purchase price — the disbursement of the proceeds has no effect on the tax you will pay. If the property was bought after August 20, 1991, you can take into account expenditure such as rates, maintenance and interest. Your accountant will be able to do the sums for you.

I am 62 and am drawing a transition-to-retirement pension. My wife is 58 and wants to continue working 20 hours a week for at least two more years. We were wondering whether she should put an extra $100 a week into super, or is there a better option? We thought the extra $100 a week would be good in a different growth fund so we have access to it while it continues to grow, considering we won't yet be able to receive super. If we come into some money, say $50,000, what would you suggest our best investment option would be?

By all means, put an extra $100 a week into super as a concessional payment because it will lose just 15 per cent entry tax. Depending on her total income, think about putting another $1000 into super as a non-concessional contribution to become eligible for the government co-contribution. Any windfall lump sums could also be contributed to super as non-concessional contributions — at your age, lack of access is not an issue.

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: noelwhit@gmail.com.



I'm 53, self-employed and earn $60,000 a year. I own my own home outright. I have two apartments worth $350,000 each, with a total mortgage of $130,000. I have savings of $800,000 and $290,000 in a self-managed super fund. In 10 years, I want to have an income of more than $2500 a week, as I feel my business may disappear by that time. I was an orphan, so am only comfortable with very safe investments. Should I move more of my savings into super, and how is that taxed once I'm over 60?

You are very well placed for retirement, with net assets of $1.7 million plus an unencumbered house, and would certainly save income tax by moving part of your savings into super. Note that there are limits — $150,000 a year for non-concessional contributions and $25,000 a year for concessional contributions. You could contribute $450,000 this financial year under the bring-forward rule. Make sure you take advice, as there are heavy penalties for excess contributions. Withdrawals from super are tax-free once you reach 60.