Plan would land you in trouble with ATO

I have a $320,000 mortgage fixed at 2.89 per cent until November. In December I will turn 60 and would like to “retire” and use my super ($950,000) to pay off the mortgage, leave the rest intact and go back to work with the same company almost immediately. Am I allowed to do this and what tax implications are there?

The short answer to your question is no! Under the superannuation preservation rules, once you have attained age 60 and retired from the workforce, you are able to access your superannuation. This does not mean that you can never work again, but you have no intention of working when you complete any superannuation documentation declaring retirement. Given that you would have (presumably) spoken with your employer about this, it is reasonable to suggest that you have every intention of returning to work and not retiring. Should you proceed with this plan, it is quite likely that the Australian Taxation Office would view your access to superannuation as contrived, and potentially penalise you significantly for breaching the preservation rules. I would strongly encourage you to not even entertain this plan!

I’m 66 this year and on the Disability Support Pension (DSP) with about $570,000 in super. Is it true that at 67 I will automatically transfer to the Age Pension and only be entitled to a healthcare card due to my super? Why can’t I stay on the DSP and still get the full pension?

You are under no obligation to transition to the age pension once attaining age pension age if you are on the DSP. And, Centrelink will not automatically transfer you to the age pension – you will be asked if you want to transition. At age pension age, your super in accumulation phase will be assessed as an asset either way. Therefore, you are likely to see a significant reduction to your income support payment from Centrelink regardless of which benefit you are on. For this reason, you would most likely roll over the superannuation to an Account-based Pension for tax free, regular income to help meet living expenses. The total value of your assessable assets (for Centrelink purposes) will determine how much income support you ultimately get.

I’m retired and on a super pension along with a partpension from Centrelink. My assets are $280,000 in super, my car, house contents and $60,000 in the bank. Recently I received a bequest of $53,000. Will I have to pay tax on it?

Here in Australia, there are no death duties or taxes associated with the receipt of an inheritance (except related to super investments). The bequest would come to you tax-free. But you would need to report to Centrelink that you have received this sum, and this would impact the income support you receive.

EMAIL YOUR QUESTIONS TO SUNDAYMONEYMAN@NEWS.COM.AU

Brenton is a director and an authorised representative of Goldsborough Financial Services Limited. His advice should be considered as an opinion. Readers should consider engaging their own personal financial adviser. Questions and answers may have been edited for length.