Share transfer faces tax hit, but discount halves pain
YOUR ADVICE
IF I transfer shares held in my name to joint names with my wife in an off-market transaction, am I liable for CGT based on the total increase in value, or on 50 per cent of that total – given that could be a reasonable assessment of the actual asset shift?
As the shares are jointly owned, you will be liable for capital gains tax on 50 per cent of the market value. Provided they have been held for more than a year, you would be entitled to a further 50 per cent discount thanks to the capital gains discount.
I RECENTLY changed my will and left some money to my son. He has a HECS debt and is having great difficulty in finding a job. I know he earns ver y little, and I suspect pays ver y little off his HECS. If this debt is still current when I die, will the inheritance I leave be used to pay it down or will he get the money to help him buy a house? Would I be better putting the money into a testamentary trust and have it given to him over a number of years?
I am a self-funded retiree, and wonder if I should give the money to him prior to my death, but the disadvantage doing this is I might need the money – as one never knows how long one will live.
The repayments on a HECS debt are taken from the income of the former student, not the assets. Therefore, leaving the money to him in your will should not affect his assets.
A testamentary trust is created in terms of your will, and may be effective if you believe your son would not be good at handling money. If you decide on this course of action, a major factor will be deciding on an appropriate trustee. WHICH is financially more advantageous, in both the short and the long term – investing in shares, home ownership, or an investment property?
I am tr ying to financially model these three circumstances but, not being an accountant, I find I am not always sure what things I need to include in my Excel worksheet to get a “real” result. Could you assist?
It is a sad reality that investing is just as much an art as a science, and it is almost impossible to put all the relevant factors into a spreadsheet. For example, your own home is free of capital gains tax and can give you an immense amount of pleasure and is also not counted as an asset by Centrelink when benefits are being considered.
Both shares and property can perform well or badly depending on what is bought and when it is bought.
This is why most investors prefer to stick with a diversified portfolio.