I work part-time for a major charity as a data analyst. My work will soon require me to do a project to which the charity will have difficulty allocating funds. Since I have two days off a week, I have suggested to my employer that I work on the project offline and log the hours. Once the project is complete I submit the hours logged as a donation — that way I can use the receipted donation against any tax that I have to pay in 2013. The charity is in a quandary about whether my work hours in lieu of actual pay qualifies as a legitimate donation. My thinking is that my work hours are monetarily quantifiable, as I get paid for 2½ days a week. If I work an extra two days a week that can easily be converted to the same monetary value. Can it be recognised as a legitimate donation on that basis?
You will need to be guided by the company's accountants, but the simplest way to proceed may be for the charity to pay you in the normal way. Provided they are an approved charity, you could then donate the wages back to them and it would be a tax deduction for you.
I am 46, single, own my home worth $700,000 and have shares worth $560,000, $140,000 in term deposits, and $250,000 in superannuation. I earn $190,000 plus 9 per cent super and receive dividends of $28,000 plus $7000 interest a year. I have no debt. I save $120,000 a year, which I am putting into term deposits, and would like to retire at 50, or go part-time. My accountant says I pay too much tax and suggests putting more into super, but I am reluctant to do this because I will need income from non-super assets before I can access my super in later years, and I like control of my money outside super. I am willing to negatively gear into more shares, which I have done in the past, but the way the sharemarket is at present, I am reluctant to do so even though I have a loan facility for this purpose. I don't know whether to keep going as I am or do something more tax-efficient.
It's a difficult decision because, under the current rules, placing money in superannuation would be the best tax-saving strategy. Also, you could access your super at age 55 by way of a transition-to-retirement pension. Unfortunately, the continual tinkering with the rules by the government makes it much harder to plan for your future than it once was. Perhaps a good compromise would be to increase your concessional contributions to $25,000 a year in total and also make a non-concessional contribution of $150,000. This would save a small amount of tax and you could rethink your options next year. You are perfectly placed to borrow for investment and provided you take a long-term view, should not be overly concerned with the normal ups and downs of the sharemarket.
I'm 25, live alone and bought my home in 2009 for $303,000 with a $100,000 deposit plus a $14,000 grant. I owe $163,000 on the mortgage with $11,000 in an offset account. I had been making extra repayments but have not continued since the offset account was set up. I have shares worth $4000, earn $80,000 before tax, and receive about $14,000 a year in tax-free meal expenses through work. My most costly activity is an overseas trip every year or two. I want to increase my small share portfolio and also want to invest in property, perhaps in the US. I'm trying to plan my next move because I want to get out of the rat race and would appreciate any advice.
Congratulations on what you have achieved to date — you are doing far better than most people your age. I recommend you do not rush into investing in overseas property; you are normally better off finding bargains in your own country. Then you won't be exposed to currency fluctuations nor potential legal problems in other jurisdictions. You have built up good equity in your home and a good next option for you could be to take out a home-equity loan to invest in a quality share trust. If you reinvest all income, your performance should match the All Ordinaries Accumulation Index. This will give you diversification, as you are already heavily exposed to residential real estate. You could always think about an investment property as your assets build up.
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 email@example.com.
My husband and I have a self-managed super fund (SMSF), of which we are the trustees and only members. The fund has $540,000 in cash, $200,000 in shares and $105,000 in managed funds. Our daughter may be attending university interstate next year. Would it be a good idea (and are we permitted) to buy an apartment near the uni as an investment for the SMSF and then rent it to her? It would seem smarter to pay our SMSF for her accommodation rather than a third party, especially as she is embarking on a five- or six-year course, and we have been looking to broaden our SMSF's investments.
The total assets of the fund amount to $845,000 — the only way an asset of the fund could be leased to a related party is if the value of the asset is less than 5 per cent of the total assets value of the fund. Therefore, unless the property to be purchased by the SMSF is valued at about $42,250, the SMSF cannot lease the property to a related party.
In any event, I do not think you should buy a property purely for the convenience of a member of the family.
You are better off to look at all the investment options available to you, including property and shares, and make an informed decision.