Tax break for shareholder activism

I AM 56 years old and recently retired on a Public Sector Super (PSS) pension. Having decided to retire, I started buying shares in several companies as the share prices had dropped. I would like to attend the companies' annual shareholder meetings but as I live in country NSW, the cost of fuel and accommodation would wipe out any small dividend I receive. As a small shareholder, am I entitled to claim a tax deduction for some of the costs of attending shareholder meetings? G.C.

Yes, you can claim for any travel expenses that you incur while servicing your investment portfolio - to visit a broker or to attend a stock exchange or company meeting, for example. The Australian Taxation Office allows "reasonable" expenses where your sole purpose in travelling relates to your portfolio. But if you drive to a Melbourne shareholders' meeting and stop off for a few days at a winery en route, those expenses would probably be rejected.

Super still the best bet

I AM 63 and my wife 52. I have $275,000 in bank accounts, $58,000 in my super and we have $587,000 in other investments. We fully own our home. My son and I have a business partnership that turns over about $180,000 a year and gives me an income of $75 a week. This income is not permanent as my son may want to leave the partnership and we would then sell the business and divide the profit. As I am only two years from retirement, what is my best course of action to maximise my income and minimise my tax obligations? J.O.

I always argue that superannuation is the best place for long-term savings as it is one of the few tax shelters available. There are mutterings around the media that the Henry Review is proposing yet more changes to super and it might be an idea to transfer some of the cash you've got into a low-cost super fund offering good client service and rapid switching. The latter is important, I feel, in this climate as the stockmarket seems to have entered a downward trend.

Don't overextend

I TURN 50 at the end of this year and believe I have 10 years at most to improve my financial position. I have an investment property with a $180,000 mortgage. I expect the equity in this property to be $100,000 to $120,000. I am interested in selling the property and using a self-managed super fund (SMSF) to buy two investment properties with the sale proceeds. I have $33,000 in super that I would rollover into the SMSF. It will cost about $5000 to set up the fund and trust needed to do this. I rent the home I live in and will continue to do so for the foreseeable future. I work full-time as a contractor earning about $40,000 a year. I'm a single parent of one 10-year-old child. M.D.

I sense you are taking a step too far, given your limited resources. I have often said that a person's long-term goals should be to retire in a fully paid-off home with enough money to live on, in that order of priority. If you've got a home, you can apply for an age pension without that asset being counted by the means tests. If you don't have a home, any cash or investment property is counted by the tests to reduce your pension and you then spend a large part of your income on rent. If you sell the property, I would prefer to see you use the money as a deposit on a home. If the price of this is such that you can roll over the existing $180,000 mortgage, you won't need to go through a new loan application process. Could you see yourself renting out bedrooms to another single parent?

Selling policies

YOU referred to a company that took over AMP policies at a greater value than the surrender value given by AMP. I have two such policies, which I have had for 30 years, but the surrender date seems to be extending (I recall it is now 85) and the policy value is not increasing significantly. While the present value of the policies is only about $25,000, I need the funds to help my daughter and her three children. Which company buys the AMP policies and what are their contacts? T.D.

The only external purchaser of life and endowment policies is Australian Policy Traders in Mosman, Sydney (austpolicytraders.com.au, 1800 601 601). They buy and trade AMP, MLC and AXA non-superannuation whole of life and endowment policies with a gross surrender value of more than $4000. Be sure to get professional advice.

If you have a question for George Cochrane, send it to Personal Investment, PO Box 3001, Tamarama, NSW, 2026. Helplines: bank ombudsman 1300 780 808; pensions 132 800.