I am 55 and no longer work,but we own our house outright. We both earn around $100,000 per year with the majority of my income from shares,bonds and cash,while my wife works full-time. What would you suggest is the best way to invest the $2000 a month? The current balance is approximately $25,000. My wife is 31 with $15,000 in super. My balance is $600,000 with the maximum concessional payment of $27,500 made each year.
If you’re planning to put money aside for your child’s future school fees,there’s one investment option that makes the most sense.Simon Letch
The best way to save is through superannuation because you can claim a tax deduction for the contributions. From July 1 you could increase your concessional contributions from $27,500 a year to $30,000 a year. If your wife contributed $2000 a month to superannuation as a concessional contribution,you would easily achieve your goal.
Given the difference in your ages,the best strategy would be for your wife to move the contributions to your account each year under the spouse contribution splitting arrangements. This would ensure the money is available in 12 years when you are 67.
I hear a lot of talk about leaving bequests to charity in your will. Is there any tax advantage in doing this?
Rachael Rofe from Australian Philanthropic Services says an estate cannot claim a tax deduction for bequests to charity,but it can benefit from capital gains tax (CGT) relief. In cases where the asset carries a gain,the estate won’t pay CGT if the beneficiary is a DGR charity. However,if obtaining a tax deduction is the goal,individuals have two options:
- Gift the asset during their lifetime to receive the tax deduction personally. Keep in mind that if the asset you choose to give as a gift or sell to generate cash for gifting has appreciated in value you may be subject to CGT. However,you receive a tax deduction for the total gift,which will more than offset the capital gain incurred.
- In your will,bequeath it to an individual,and they will inherit it at your cost base. If they choose to personally donate it to charity,they will be eligible for a tax deduction. Then it’s the first scenario again. They will enjoy a personal tax deduction for the total gift that will more than offset any CGT liability.
My wife and I have a large super fund invested mainly in shares,we are both 87. Would it be better to cash them in and put the cash in a term deposit?
At your stage in life,the important thing is to ensure you have enough liquidity to take care of future expenditures. If the shares are good ones and the dividends are adequate,there may be no need to sell any.
Obviously,there are no age pension issues here,so you should really start thinking about whom the beneficiaries of your estate will be when you die. It may be better to cash out your super and give it to the beneficiaries sooner rather than later,compared to leaving it to them via your estate (with the potential super death tax).
I am 67 and on a disability support pension. My wife – aged 62 – is my carer. She is inheriting $200,000 from the estate of her father. Can you confirm this will not affect our payments if she contributes it to super?
If she contributes the money to super and leaves the fund in accumulation mode it will not be counted by Centrelink until she reaches pensionable age.
Noel Whittaker is the co-author of Downsizing Made Simple with fellow finance expert Rachel Lane, available. Email:
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