Super payments to help daughter still incur taxes
IF my employer is contributing $10,000 into my superannuation as part of the super guarantee system, and I make a payment of $10,000 into my superannuation from after-tax dollars, would that payment be tax deductible?
I was thinking of paying the money into my daughter’s superannuation (I believe she would be able to get the tax deduction) and then she could draw it out in two or three years’ time for a house deposit. She is currently employed, with her employer making super guarantee contributions.
If you pay the money into your own fund you can claim a tax deduction provided your concessional contributions from all sources do not exceed $25,000 a year. If you give the money to your daughter and she makes a contribution into super, it will incur a 15 per cent contributions tax if she claims a tax deduction for it. If she eventually withdraws the money to help purchase her home the balance will be taxed at full marginal rates less a 30 per cent offset. If you decide to adopt this strategy just check first with your fund to confirm they can accept the contributions. IN your column you stated a tax deduction could be made to super contributions against capital gains in the tax return from July 1, 2017.
I have worked in accounting offices for over 40 years and understand most things with tax, but this confuses me. I thought the tax deduction for super contributions up to $25,000 would be against the total taxable income, not just the capital gains tax portion.
Please enlighten me. Does it apply to anybody from July 1, 2017?
Capital gains tax is calculated by adding the capital gain to the taxable income of the investor in the financial year the sale is made. A tax deduction for any reason, including superannuation, would reduce the taxable income which, in turn, could reduce the total tax due on the total income, and capital gain is included. From July 1, 2017, everybody who is eligible to contribute to superannuation can claim a tax deduction for personal contributions — the total deduction cannot exceed $25,000 a year, which includes any contributions made by the employer. I WANT to clarify the rules regarding Airbnb and CGT. If I choose not to claim expenses in relation to renting rooms in my home, but declare rent as “income’, can I avoid the CGT on the home at point of sale if I decide to sell up and move.
The way to avoid the CGT problem is to move out of the home while the guests are there. Then you will be able to take advantage of the six-year rule which allows the property to be rented out for up to six years as long as you do not cover another place with your CGT main residence exemption during that period. Noel Whittaker is the author of Making Money Made Simple and other finance books. His advice is general in nature and readers should seek their own professional advice before making financial decisions. Email: noel@noelwhittaker.com.au
If you give the money to your daughter . . . it will incur a 15 per cent contributions tax