I refer to the new rule that a person with more than $1.6 million in super can not make any further non-concessional contributions. Is this a lifetime measure or would it be different if they had run their balance down to say $900,000 from $1.6 million?
The $1.6 million eligibility threshold will not be a lifetime measure. If your balance drops below $1.6 million you would be eligible to make contributions again (as long as you are under 65, or between 65 and 75 and meet the work test). Note these new contributions will be credited to your accumulation account, not the pension account.
My husband and I are retired; I am 59 and he is 70. I receive a State Super Defined Benefit pension, and he receives a part pension from Centrelink, together with a pension from our self-managed super fund.
We understand that my husband can gift $30,000 from his side of our super fund, over three years.
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Am I able to gift or lend money from my accumulation side of the fund? At present I am not withdrawing any of this money. Will this affect my husband's Centrelink entitlements?
Is there any way we can help our daughter boost her already substantial savings to get a foot into the property market, without affecting my husband's Centrelink entitlements?
The family is assessed together and is allowed to gift $10,000 a year with a maximum of $30,000 over five years. If either of you give or lend money to your daughter in excess of the above limits it will be subject to deeming. If you talk to a good mortgage broker you may find you are able to help your daughter by way of a part guarantee – just make sure you do not put your names on the title deed.
My husband and I are saving for a deposit on a house. We have nearly enough but can't apply for a loan yet as one of us is self-employed and needs two more years of tax returns to get the loan we want. We have saved $90,000 and will continue to save in the next two years. We have our money in a high-interest saving account – is this our best option? We feel like we could do better as the interest rates are so low but don't know what to do.
For a short term like that the only practical option is a high-interest bank account.You can't afford entry or exit fees nor take the risk of the share market falling drastically just when you are ready to buy your dream home.
I have heard that financial advisers do not believe that it is a good idea that young workers salary sacrifice into superannuation because they cannot get access until retirement. However, if an 18-year-old put in $20 a week while still single, can you advise me what earnings could be achieved after 35 or 40 years in their fund?
As a general principle, I recommend accessibility should be a major factor when deciding where to invest. However, my advice to young people is to contribute $1000 of after tax money into super and so qualify for the $500 government co-contribution. This is a great tax-free return and enables them to boost their super while they are young. Suppose they started this strategy when they were 17 and their super fund earned 9 per cent a year. At the age of 25 they would have an additional $19,000 in super – if no more contributions were made by them, and the fund continued to earn 9 per cent a year, they would have an additional $597,000 in super at age 65. This is in addition to the compulsory employer super.
I am 42 and work full time and have no dependents. I have a current mortgage of $180,000 tracking at 3.9 per cent a year. I recently inherited $150,000 and I want to know if I should pay it off the mortgage, or keep it in an offset account or invest elsewhere.
You should be endeavouring to minimise your non-deductible debt while maximising your deductible debt. The best option is to place the money in the offset account where it will reduce the interest payable on your non-deductible home loan. Then, if you wished, you could take out a home equity loan to invest in some good managed funds. This would maximise the tax effectiveness of your situation while giving you flexibility. You would also have the security of knowing the money in the offset account is available on short notice if you need it in an emergency.
Noel Whittaker is the author of Making Money Made Simple and numerous other books on personal finance. His advice is general in nature and readers should seek their own professional advice before making any financial decisions. Email: asknoel@fairfaxmedia.com.au.