Illustration: Michael Mucci.
We are planning a family holiday to Europe and wanted to use our 28 Degrees Mastercard, however now that the product includes fees it no longer seems such good value. I have received two travel cards without even applying and it's easy to compare general fees, but how do I know which one offers the best exchange rate?
The 28 Degrees Mastercard offers a good exchange rate and the only fees that are charged are on cash withdrawals. The other option is an OzForex pre-paid travel card - if you go to the Ozforex website you will see examples of how favourably its rates compare with those offered by the travel cards issued by the big banks.
I hold shares in a trust for my two young children, in their own names. It is a simple index fund and the dividends are reinvested. What is the most effective way to set up the trust to avoid capital gains tax? Would a better option be to set up a family trust to hold the shares?
As the shares are held as trustee, the trustee will be liable for the punitive children's tax until they reach 18, but provided the trust is set up properly, there should be no capital gains tax on transfer of the shares to them at that age. I think investing in a share-based investment bond is a much simpler and more tax-effective strategy. The maximum tax paid within the bond would be 30 per cent, and the bond can be transferred without capital gains tax at any stage.
I am 26, earning $170,000; and my partner is 28, working part-time and studying. We are working overseas and renting but have no credit cards or debt, apart from my $45,000 HECS debt. We have $16,000 in a First Home Savers Account (FHSA), with a goal of $75,000 by January 2015. We would like to buy an apartment in the next two years, when the FHSA allows us to. I have $13,000 in a low-interest savings account and we are habitual savers. I don't know whether I should start investing now, or save for the future when my income could drop down to $70,000. I would like to start a share portfolio.
The name of the game is to maximise your deductible debt, and minimise your non-deductible debt. Therefore at this stage in your life, I suggest you focus all your energies on putting a sizeable house deposit together which will minimise your non-deductible debt, and hopefully eliminate costly mortgage insurance when you get a housing loan. Then, when appropriate, you could borrow against the house to invest in shares.
Regarding changes to the treatment of account-based pensions for age pension eligibility, my query is about someone aged 58 on a disability support pension with $185,000 in superannuation accumulation phase and $10,000 in savings. If he does not commence an account-based pension before January 1, 2015, will he be affected by the new rules for the age pension income test when he reaches age 65? He is not able to work and can satisfy a condition of release to enable him to set up an account-based pension. He has the choice of remaining on the disability support pension or switching to the age pension at age 65 - as I understand it, both pensions are currently assessed under the same rules. Will this be the same under the new guidelines?
Yes. To be unaffected he will need to be both on income support payments and have an account-based pension. If he wanted to ''lock in'' grandfathering he could start an account-based pension before January 1, 2015. It appears both pensions will still be assessed under the same rules. Keep in mind that this is subject to the bill being passed by the Senate where it is currently being reviewed. Amendments could still change the final legislation. It is essential expert advice be taken. Superannuation in accumulation mode is exempt from Centrelink assessment until the member reaches pensionable age. However, once an account-based pension is started, it becomes assessable immediately.
