I am aged 57. I bought a home 18 years ago and lived in it for 10 years before moving to my new wife’s home, where I have been living for the past eight years. My original home has been rented for the past eight years. I am thinking of selling it and I am wondering what the capital gains tax position would be? There has been no capital gain since it has been rented.
When the house ceased to be your permanent residence eight years ago it would have been prudent to arrange a valuation because you are only liable for capital gain on any increase in value since then.
If there has been no gain, as you think, then there should be no capital gains tax implications on any sale. Just make sure you check with your accountant before you sign any contracts.
My mother has been admitted to a high-care, residential aged facility due to medical reasons. The Refundable Accommodation Deposit (RAD) is $350,000 but my mother has assets of about $250,000 ($180,000 in shares and $70,000 in cash at her bank). I have already transferred $50,000 to the aged-care provider. The Daily Accommodation Payment is $46 and the means-tested fee is about $6 a day, plus the basic care fee. She receives a full aged pension and has a negative cashflow of about $300 per fortnight, after costs are deducted from her income. Is the best option to sell all her shares and transfer this as part payment of her RAD, thereby reducing the DAP and bringing her negative cashflow to about $70 per fortnight? Family members will contribute this $70. The other part of my question is my mother has not submitted a tax return since 1996, as I think she did not have to lodge a return. However, selling the shares will create a Capital Gains Tax but she has no record of when she purchased them (probably about 25 years ago) or the buying price. Does the ATO accept an estimate of the buy price and should her Enduring Power of Attorney (EPOA) seek advice from a tax accountant?
Aged-care specialist Rachel Lane says that one of the things to think about is the return on your mother’s investments, compared with the cost of paying the DAP.
The interest rate for calculating the DAP is 4.98% per annum (although it will depend on when your mother moved in). The return on your mother’s investments may be more or less than that.
If it’s less, then paying towards the RAD may make sense as you are effectively offsetting 4.98 per cent, rather than earning, say, 1 per cent on the investments.
It is important to discuss the CGT consequences with your accountant, as paying CGT now is more tax effective than leaving the assets to beneficiaries.
Your accountant can also advise on calculation of the cost base of the shares.
Lastly, think about your mother’s estate planning wishes.
If the shares or cash – or both – are specified assets in her Will, dealing with them now could have an impact on her estate planning. That being said, it sounds like you are acting under an EPOA and, as such, your task is to act in your mother’s best interests and not those of future beneficiaries.
My husband turns 75 this year. Can his employer still make super guarantee contributions (SGC) for him? Our financial advisor is adamant that the employer can only pay SCG super to a 75-plus year old if they are covered by an employment award. He says our company cannot pay the SCG super for my husband as soon as he turns 75 (and me two years later), as we are not covered by an award.
Since July 1, 2013, the age of an employee is not relevant to SGC, which is payable regardless of the employee’s age, unless they are excluded for another reason.
You cannot contribute to an account in pension mode but an accumulation account can be established for the member to accept the SGC deposits. It just means the fund is not in 100 per cent in pension phase.
Noel Whittaker is the author of the new, revised Money Made Simple and numerous other books on personal finance. [email protected]
Noel Whittaker, AM, is the author of Making Money Made Simple and numerous other books on personal finance.