Lavish gifts leave lasting impression on pension tests
YOUR ADVICE
I TURNED 65 last December and am now on a part pension. In May 2012 I gave my daughter $90,000 and then in November 2012 a further $30,000. This was all declared when I applied for the pension.
As I understand it, the amounts of $80,000 and $20,000 ($10,000 less in each case) are part of my assets calculation for the pension for a five-year period from the date of the gift.
The five-year period for the $80,000 gift would have expired in May this year. Am I correct in my understanding that my asset value for the pension would then have reduced by the $80,000 and will do similarly for the $20,000 this month?
Would this happen automatically by Centrelink or do I have to contact them?
Your understanding of the calculation of gifting is correct. You will not have to contact Centrelink at the end of assessment periods.
When the department is advised of a gift, it is recorded in full from the date when given. If more than $10,000 has been given that financial year, or $30,000 in a period of five financial years, the excess is calculated and maintained as an asset for five years. At the end of five years, the excess is automatically no longer included in the assessment.
I OWN $95,000 worth of shares. I wish to transfer these shares into joint names with my wife. I wish to
DEPOSIT WATCH do it as all of our other accounts are joint. Will there be any CGT implications for such a move? If yes, will it mean that my wife will have a capital gain and I an equivalent capital loss? What happens if my shares are currently trading at a loss? Will the capital loss transfer to her? Is it true that capital loss from shares can only be compensated against capital gains from shares? Is it a good idea to consolidate our accounts? My salary is $90,000 per annum and hers is $20,000 per annum.
If you transfer shares held in your name to joint names the transaction will by treated by the tax office as a disposal of half the shares at market value, so you will be liable for capital gains tax if there is any profit made on that transfer. If the shares are worth less than you paid for them, the transfer will trigger a capital loss, which can be offset against other capital gains made by you or carried forward for future years. The cost base to your wife will be the market value at the date of transaction.
Noel Whittaker is the author of Making Money Made Simple and other finance books. His advice is general and readers should seek their own professional advice before making any financial decisions. Email: noel@noelwhittaker.com.au