I am 67 and retired. My wife and I have a self-managed super fund in pension mode and the total balance is more than $1.6 million each. As I understand it I must reduce the total amount to $1.6 million each as at June 30. How is this possible without doing a set of accounts that can't be done until after June 30, 2017? Do I take an "educated guess"? I'd like to get it right the first time.
The government does not expect you to do the impossible. The consensus among industry experts seems to be that the trustees of your fund need to do a minute at June 30 stating that $1.6 million of the fund a member is to be in pension mode at June 30, 2017, with the balance of the fund to be held in accumulation mode from that date. If a member had multiple pensions the minute should state which pensions are to stay as pensions and which ones return to accumulation.
Then, after the relevant dividend statements, and managed fund tax statements, and possibly the tax refund cheque arrive, you can have the accounts prepared as June 30, 2017. If you are leaving your assets un-segregated, the fund can then proceed normally. When the accounts are prepared for the year ending June 30, 2018, actuary will prepare a certificate which apportions the earnings between pension mode and the accumulation mode.
I have an investment property that I am selling. Capital gains will apply to the proceeds. If settlement of the property was scheduled on or after July 1, apart from the obvious, I suspect, of deferring the payment of CGT for 12 months, are there any disadvantages in adopting this policy?
First keep in mind that the appropriate date is date of the contract, not the settlement date. I guess the big decision for you to discuss with your accountant is whether a transaction this year or next year is best for tax purposes. The danger of waiting until after June 30 to sign a contract is that you may lose the deal.
I understand that to be eligible for the Centrelink age pension, there is an income test and asset test. Being a retiree aged 66 with retiree wife aged 57, will the tests be on both combined income and assets, or will it be on my own income and assets?
The tests will look at total family assets and income but bear in mind that money in superannuation is not assessed until pensionable age. Therefore, to maximise your Centrelink entitlements you should be trying to maximise the amount your wife has in super. You could even investigate withdrawing money you have in your superannuation, if there is any, and contributing to her super.
I am a retired, single, 63-year-old woman and would like to take a special holiday costing $10,000. I have some money I could use in a super accumulation account as well as some good shares. Would I be better to withdraw the amount from the cash component of my super account or sell some of my shares?
Over the long haul, shares should produce better returns than cash, therefore I would prefer that you took the money from the cash component. Just bear in mind, it is prudent to have at least two years' planned expenditure in the cash type area, so make sure you still have liquid funds in case of emergencies.
After reading your article on transition to retirement pensions, I wonder what is the benefit for those who are aged between 56 to 60 if the income from the income stream is fully taxable less a 15 per cent rebate?
The benefits for everybody is access to your superannuation before you have retired if you wish, and the ability to take advantage of the difference between your marginal rate and the 15 per cent tax on contributions. If you earned $70,000 a year and took $10,000 in hand you would lose $3450 in tax, but would lose only $1500 if it was contributed to super. The ability to withdraw the money as a transition to retirement pension would solve the problem for a person who wished to adopt the salary sacrifice strategy but whose budget would be unable to cope with the loss in gross salary of, say, $10,000.
Just keep in mind that a TTR income stream remains tax-free for those aged 60 and over.
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.