Divorce puts our super under the microscope
YOUR ADVICE
I AM going through a divorce and am looking into both our super accounts. Is it easy for us to split them down the middle?
It is possible to do this when the property settlement is being done – but there can be complications.
Think about a situation where both parties were in their 40s, one of them did not work, and super and the family home were their main assets. Because the super could not be withdrawn until they were 60, one party could find themselves with considerable assets that could not be accessed and so would be unable to get enough for a deposit for a home to start off again.
These matters should be considered when the property settlement is being negotiated. There are many possible scenarios – this is why it is important to take top legal advice, and negotiate an outcome which will result in a win-win for both parties.
I AM renting out part of my home on Airbnb and have been faithfully declaring the income and expenses on my tax return. Does that put my capital gains tax position in jeopardy?
Yes.
Julia Hartman of Bantacs says that once you start renting out part of your home, the cost base is reset to market value as at the date when it first produced income. From that point the CGT when you sell is a pro rata calculation so you should start keeping receipts for everything including cleaning, light globes etc, even for the part you are living in. Also record when it is vacant so you qualify for the main residence exemption for that period.
The perfect option for tax minimisation purposes would be for you to die there, and not have it rented at that time. Then your heirs would inherit the property at market value at date of death and all CGT would be forgiven and forgotten.
I AM a little confused. In a recent column, you said that money gifted or loaned is treated as a deprived asset by Centrelink for five years. But then you go on to say that money loaned will be assessed until repaid. Did you mean if it was repaid before five years, or until full repayment?
You need to understand the difference between a gift and a loan. If I make a gift which exceeds the limit of $10,000 a year, the balance of that gift is held as a deprived asset by Centrelink for five years even though the money is no longer my property. After five years it ceases to count for Centrelink purposes.
However, a loan is an agreement between a lender and a borrower that the money lent will be repaid at some stage in the future. As a result, it cannot cease to exist after five years for Centrelink purposes as it would still be owing unless forgiven. If it is forgiven, it is then treated under the gifting rules.
Noel Whittaker is the author of
and other finance books. His advice is general in nature and readers should seek their own professional advice before making any financial decisions. Email: noel@noelwhittaker.com.au