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Ask Noel

Each week, financial adviser and international best-selling author Noel Whittaker answers your questions.

Each week, financial adviser and international best-selling author Noel Whittaker answers your questions.

am 43, self employed, earn $300,000 a year, and contribute $25,000 a year to my SMSF. The super fund is invested heavily in blue-chip stocks that pay fully franked dividends. I have the capacity to contribute an additional after-tax $25,000 a year into the super fund. Is this a good idea given the favourable tax environment in super, or should I invest in the stockmarket in my own name? I own my home and prefer to invest in the stockmarket as I also own three investment properties with minimal debt.

You are in a very good financial situation and given that you cannot access your superannuation until at least age 60, I believe you will do better investing outside the superannuation system. For a person in your tax bracket, $25,000 after tax is equivalent to $46,725 pre tax, which means, in theory, you could expend this much a year in tax-deductible interest to borrow for a share portfolio. At current rates of interest, this would be a loan in excess of $600,000. You could also consider investing into share-based insurance bonds, which pay tax internally at 30 per cent and can be sold after 10 years with no capital gains tax.

I'm 48, single with no dependants, earning $52,000 a year with a mortgage of $100,000, $40,000 in an offset account and no other debts. Should I invest in shares, pay some off the house, or put some into a term deposit?

You should be trying to minimise your non-deductible housing loan, and keeping money in the offset account is effectively doing that. You could consider borrowing to invest into share trusts, this would provide tax advantages and diversify your current strategy. Depending on your goals, salary sacrifice to super may also be a mechanism for you to save for retirement while reducing tax. Talk to a good adviser.

My husband is 54, earning $162,000; and I am 50, earning $50,000 a year. We own a holiday villa worth $750,000 with a $40,000 mortgage that we rent out periodically and use ourselves. Our home is debt free and worth $700,000. We have $25,000 each in super. My husband is salary sacrificing $25,000 into superannuation. We have $400,000 in the bank in my name. We have been thinking of putting $150,000 each into super as non-concessional contributions and having our super invested in capital. Should I leave $100,000 in the bank or buy $50,000-worth of blue-chip shares. Are we on the right track?

You are at the perfect age to be investing in super, but favour doing it in your husband's name as he can access his superannuation at age 55 if he retires. I can't see any point in holding large sums outside super — you may as well enjoy the tax breaks inside super. Like your husband, you should consider salary sacrificing as it provides taxation reprieve after considering your salary, interest and any share of rental income.

My wife and I are in our late 70s and are sole beneficiaries of our late son's estate. His estate is about to receive his superannuation/death benefit of about $250,000. We receive a part age pension through Centrelink - will this be affected and will we have to pay any tax on the inheritance?

It is likely that the inheritance will have both a taxable and a non-taxable component. There will be a tax of 17 per cent to pay on the taxable component if you are a non-dependant of your late son. The extra asset will certainly affect your pension — I suggest you talk to your adviser.

I earn $52,000 a year and plan on borrowing to invest up to $100,000 in good-quality Australian shares. How would you suggest I secure the best investment loan available? Are there investment loans where you can make extra repayments to pay it off quickly?

Provided you have a secure income, the ideal situation would be an interest-only loan that is secured by a loan over your residence. This would obviate the possibility of margin calls and maximise the resources available for you to keep building the share portfolio. Seek a loan that is flexible with a competitive interest rate and low or no fees.

When you're on a good thing, stick to it

The explainer

I am 23 and have $50,000 in the bank and $25,000 invested in high-risk shares (this originally began as a $4000 outlay and grew to $20,000, then the original investment was removed). I am a tradesman with no debt. I want to make the most of my savings. What can I invest in so I don't cop the 45 per cent capital gains tax?

The maximum capital gains tax that can be paid on assets held for more than a year is 23.25 per cent, and this is for people who earn more than $180,000 a year. Australian shares are a very good investment for you because there is no capital gains tax until they are sold and the fully franked dividends are tax-free if you earn less than $80,000 a year. You have done very well to date and I suggest you keep going in the same direction.

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