Ask Noel

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

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

I purchased a flat in Canberra for $405,000 in August 2010, moved in and lived there until October 2011. The flat has been rented since November 2011. In January 2013, I purchased another home where I now live. I don't want to sell the Canberra flat in the current market, but would like to do so before capital gains tax takes effect. How do I calculate when that would be - is it six years from time of purchase, time of vacating, or time of gaining a new main residence?

The six years runs from the time you vacated the property - just keep in mind you cannot cover two properties with your main residence CGT exemption. You will need to take advice from your accountant if you sell your current property, or the Canberra property, as you will need to elect at that time which property you will cover with the exemption.

I have a very small amount in my super fund. I would like to borrow funds to buy a property in a self-managed super fund within the next year. Is this possible — and if so how?

It is generally accepted that you need at least $200,000 in super to start your own self-managed fund. Obviously, you are not in a position to do that. But, if you have good equity in your home and a good income you could look at borrowing for investment in your own name.

My wife, who is almost 54 and six years younger than me, is not currently working and does not intend to. She has a super account. When she turns 55, can she withdraw the tax-free amount permissible and leave the balance amount in the account to withdraw only when she reaches her age pension age? Can I make further spouse contributions to the account after her withdrawal, and will her balance superannuation amount be assessable towards calculation of my age pension entitlement when I reach age pension age?

If she is prepared to sign a statement that she is permanently retired, she can withdraw $180,000 tax-free from her super, and you will still be able to make spouse contributions for her. Under the existing rules, money in super is not counted by Centrelink until the member reaches pensionable age.

I have a self-managed super fund which comprises shares plus a rental property worth $1.8 million from which I derive rent — the rent funds my allocated pension. I am a widow aged 69, presently drawing up my will, with two adult children who will inherit my estate absolutely. Will they have to pay any tax when they inherit my property from the SMSF? I wish to minimise their tax liability as they are both on a disability pension - which I assume they will lose when they inherit my assets.

There will be tax of 15 per cent plus the Medicare levy on the taxable component if it is left to a non tax dependant. You will need to talk to your adviser to ascertain the split between the taxable and non-taxable components, and you will also need to decide if the children will qualify as dependants in view of their health issues. There will be no tax if they are dependants and in this instance you might want to consider leaving them an income stream from your SMSF. It is most likely they will lose the disability support pension as a single home owner can only have up to $735,750 before losing the entitlement.

I am 77 and work part time earning $18,100 a year. My employer pays into my super, and my balance is $77,000. My husband is retired on an allocated pension, and we receive $700 a fortnight from Centrelink. Can I make a personal contribution of $10,000 to my super from unpaid holidays and long-service leave when I retire later this year? The Australian Tax Office advises there is legislation up to age 75, but nothing above this.

Only mandated employer contributions such as superannuation guarantee can be accepted after age 75. Personal contributions or salary sacrifice cannot be accepted by a super fund.



Diversify to hatch prosperity

The explainer

I have three super funds but contribute to only one of them. I understand you should combine all your super to avoid multiple fees, but I also know it's best not to put all of your eggs in one basket. Which is best, one fund or more to spread the risk?

Putting all your eggs in one basket can mean a lack of diversification by having all your assets in one class (for example residential property), or it can mean having all your money with one institution, such as Banksia. Provided your super is with one of the well-known and well-regarded Australian funds, the only practical issue is for you to make sure your money is held across a range of assets that suit your goals and risk profile. The fund may do this automatically if it's, say, a "growth" or "balanced" fund, or you may elect which specific assets are appropriate for you. This is probably a good time for you to seek advice to make sure your superannuation assets are a good fit with your assets outside superannuation.

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