It seems many people I know are pulling their money out of superannuation and setting up self-managed super funds so that they can buy silver and gold. They seem to believe that a sharemarket collapse is on the way, and that holding precious metals would be safer than holding their cash in super. I am not convinced and I wonder what you thought about this strategy?
I do not think I can recall a time when somebody wasn’t forecasting a market crash just around the corner.
It is a fact that nobody can consistently and accurately forecast the direction of sharemarkets but, what we do know is that good assets always bounce back after they fall.
If your money is with a good super fund it will be spread across local and international shares, fixed-interest investments, property and infrastructure assets. It is a good mix that should perform well over the long haul.
If you cash out of your super to buy silver and gold, you are simply taking a punt on the price of those commodities. I think that would be unwise.
A few years ago, I moved away from my home region to a smaller country town and now wish to move back, but I can’t afford house prices there. However, I have an old friend there who would also like to move into better housing. I receive a part-pension and she does not. If we both sold our homes and bought an apartment together and lived not as wife or de-facto, not sharing finances, bedroom etc, but living just as friends, how would this affect my pension? It would be appreciated if you could point me in the right direction.
Two people are entitled to share accommodation and the effect on their Centrelink entitlements depends entirely on the facts of each individual case.
You would need to keep your affairs strictly separate, and make sure you are not seen to be a couple, or act as a couple. If you do that – and continue to do it – there should be no problems.
At age 57, I formally retired and converted my super account from accumulation to pension mode. It is now worth about $1. 3 million. I have been taking a monthly payment from this account since then. Sometime after retiring, I had an offer of further work in a consultant role, which I took and was therefore required to open a super account for salary contributions. The balance of this account is now about $100,000. I am now 65 will not undertake any further paid work, and would like to close the accumulation account and consolidate my retirement funds into the pension account, where it will not attract tax on earnings. Is my preferred course of action possible? I do not require the $100,000 at this time.
It is certainly possible, but you would not be able to add that money to an existing pension account.
You could either start a second pension account, or commute (stop) your existing pension and roll it back to accumulation mode, then roll over your other super account into this accumulation account, so that you could then start a new combined pension.
Your best strategy depends on your current financial position. The main aim of super is to save tax, so it might be worthwhile considering whether you would be no worse off just leaving the money in your bank account, where it would be available at call.
Eight months ago, my wife and I paid $800,000 for a block of land on which we intended to build our dream home. After spending considerable money on plans and approval, we now find that due to the huge escalation of building costs we are unable to go ahead. This leaves us with the sad decision to sell the land. It is now worth $1. 2 million. Would it be exempt from capital gains tax (CGT) because we intended to build our home? We have three young children.
Julia Hartman, of accountants Bantacs, tells me that the circumstances you describe do not give rise to a CGT exemption.
The only way to get an exemption would be to live on the property for at least three months. This could include putting a caravan there, or building a liveable shed.
If the property was then sold it would be exempt from CGT, provided the caravan was included in the sale.
However, I do not think those options are viable, given you have three young children.
If you do decide to build a home on the block, you have four years from the date of purchase to build the house to be exempt from CGT.
Just be aware that the 50 per cent CGT discount would not apply until you have owned the property for more than a year from the date of signing the purchase contract.
The CGT may not be too harsh after you consider the discount, and the fact the land is in joint names and the tax can be split.
Furthermore, all costs you have spent so far on the block can be added to the base cost. These include rates, purchase expenses, cost of plans and selling expenses.
- Advice given in this article is general in nature and is not intended to influence readers’ decisions about investing or financial products. They should always seek their own professional advice that takes into account their own personal circumstances before making any financial decisions.
Noel Whittaker is the author of and numerous other books on personal finance. Email: [email protected] com. au