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I am a widow with a substantial share portfolio which is my primary source of income. I am concerned about capital gains tax and wonder if I’m better off giving all or some of the portfolio to my children now, or whether I’m better off leaving it to them when I die. Could you please explain the implications of leaving shares to children in your will?
Death does not trigger capital gains tax (CGT) – if you leave the shares to the beneficiaries they will receive them at your base cost. For example, if you had 1000 shares that cost you $10 a share, but are now worth $30 a share, they would be deemed to have acquired them at $10 a share and pay CGT on the difference between the base cost and the market value if and when they decided to sell them.
Death does not trigger capital gains tax, but it still may be advantageous to pass on your portfolio before your death.Credit: Simon Letch
Based on the information provided, you probably do not have a high taxable income – if you are keen to transfer some of your shares to your children before death, you could liaise with your accountant and work out what CGT if any would be payable if you transferred small parcels each year.
Also, if you are of a philanthropic nature, you could make a charitable donation equal to the taxable capital gains, which would assist in reducing and/or eliminating the capital gain.
If I have less than $1.7 million in my superannuation accumulation account in any year ending 30th June, regardless of whether my balance has at times exceeded that, can I make further non-concessional contributions to top up to the cap? Say if I were to receive an inheritance or receive a lump sum from asset disposal, for example.
John Perri of AMP Technical tells me that if your total super balance cap on 30 June in a previous financial year is less than $1.7 million, you may be able to make non-concessional contributions in the following financial year.
If the total super balance is less than $1.48 million, and provided the 3-year bring forward has not been triggered previously, up to $330,000 may be contributed as non-concessional contributions. If the total super balance is between $1.48 and $1.59 million, then the max non-concessional contribution is $220,000, and above $1.59 million it is $110,000.
Note the $1.7 million is rising to $1.9 million from 1 July 2023 regarding total super balance.
I have been a borrower via the Home Equity Access Scheme since January 2021. How do I get information about how much I owe? The last letter I received from Centrelink was in May 2022 advising the fortnightly payments have increased as a result of the March CPI adjustment. They advised the new fortnightly payment along with the outstanding balance. There was no further advice after September.
A Centrelink spokesperson tells me people who have a Home Equity Access Scheme (HEAS) loan can check their loan balance online at any time. They can do this by logging on to their Centrelink online account through myGov. Next, they should go to the Payments and Claims option and then select the HEAS Summary page to see their loan balance.
People have the option to print an itemised statement of their loan through the HEAS Summary page or through the Request a Document Service. People can also use their Centrelink online account to manage their HEAS payments, report any changes of circumstance, and complete any required reviews.
I am aware that if you sell your house to downsize, the proceeds can be exempt from the assets test for 24 months. If you purchase a cheaper house within that time does the excess immediately get assessed as part of the assets test or does the 24-month holding period still apply?
If the home is sold on or after January 1, 2023, Centrelink will continue to assess a person as a homeowner for a period of up to 24 months. You will be required to declare to Centrelink that you are intending to purchase/build/renovate a new residence and the amount of those proceeds you intend to use to do so. This intended amount will be exempt under the assets test starting from the date of sale (usually the settlement date).
- 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 Retirement Made Simple and other books on personal finance. Email: email@example.com
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