• Question 1: I am 66 and still working. I have $300,000 in super and owe $50,000 on the house I live in. Since my super will reduce over the years to $0 what is the advantage of using my super to pay off my mortgage and buying an investment property, and live off the rental and age pension. Then, if required, sell the investment property when I am much older.

Hi, when you say your super will reduce to zero, that will depend on how much you are drawing out and what return you are achieving.

Using a very crude example, if you draw down 5 per cent of your balance a year, but are getting a return of 7 per cent a year, then your balance will go up. Happy days.

You would still be eligible for an age pension under this scenario, so the super would be just topping up your income, in which case you would not need to draw down large amounts each year.

On the other hand, if you took $300,000 out of super, paid debt of $50,000, then what kind of an investment property could you buy for $250,000?

You would most likely need to take on debt to buy the property.

In retirement this is normally not a good option as firstly you will have to make regular loan repayments.

Secondly, once retired your taxable income is low so negative gearing does not have many advantages for most in that age group.

Thirdly, there are some high upfront costs when buying a property, which will be a high percentage of your $250,000.

Finally, what if you need a lump sum to buy a new car or go on a big holiday, or anything else you may have in mind? You would need to sell your whole property, where with super you can make the required withdrawal only.

Given your age and circumstance buying an investment property is not something I would generally recommend.

As you are over 65 you can convert the funds to an income stream, or make a lump sum withdrawal at any time, both tax free.

As you are still working, I would look to continue to build super as that gives you all the upside of the tax benefits but the normal downside of not being accessible is not applicable given your age.

Depending on your interest rate on your home loan and your salary, you could look to withdraw $50,000 and pay this loan. Then build your super back up via regular contributions before retiring.

I recommend you seek specialised personalised advice over this.

• Question 2: We are a couple aged 71 and 70 living off my super. Can I take $750,000 out of my super to buy a flat, then once I sell our house put $600,000 back into my super within the rules?

Hi there. Firstly, as you are over the age of 65 you can do whatever you want with your super, including buying another property.

In terms of getting some money back in, there are potentially two ways to go about this.

1.  As you under 75 you can both make non-concessional (after tax) contributions to super of up to $330,000. So long as your balance is below $1,480,000
2. If you have held your current home for more than 10 years, then you may be able to make a ‘downsizer’ contribution to super of up to $300,000 each, regardless of your current super balance.

The above two strategies assume you are comfortable in having funds contributed in both you and your partner’s super.

If for some reason you wanted all the funds to go into one account, then one of you could potentially do both of the above strategies, i.e. make a non-concessional contribution of up to $330,000 and a downsizer contribution of up to $300,000.

• Question 3: My husband is not working. Can I put money into his super and claim this as a tax deduction?

Sorry, no. You can only claim a tax deduction on super contributions going into your own account.

However, you can make a ‘spouse’ contribution into their account.

If they have assessable income below $40,000 and are under the age of 75, by making a $3000 contribution you can claim a tax offset of up to $540 in your tax return.

Your super fund or tax adviser can provide you with further details on this.

• Question 4: I have a Concession Health Card (CSHC) but do not qualify for a pension. I have two allocated pensions with a sizeable amount of money and a very small superannuation.  My income is below the threshold to pay tax because the allocated pensions withdrawals are tax free and super does not generate tax. However, there is a chance that my income will increase in the near future. Do the allocated pensions and super attract deeming income such that I could lose my concession card?

Hello, in relation to the income test for the CSHC, it is based on your taxable income plus deeming of your allocated pensions only, not your super.

Prior to January 1, 2015 the income test did not even include deeming of allocated pensions, so if you held the CSHC and the allocated pensions prior to this date they made be ‘grandfathered’ and not deemed.

As I have said recently the income test is now very generous, $90,000 for singles and $144,000 for couples.

Craig Sankey is a licensed financial adviser and head of Technical Services & Advice Enablement at Industry Fund Services

Disclaimer: The responses provided are general in nature, and while they are prompted by the questions asked, they have been prepared without taking into consideration all your objectives, financial situation or needs.

Before relying on any of the information, please ensure that you consider the appropriateness of the information for your objectives, financial situation or needs. To the extent that it is permitted by law, no responsibility for errors or omissions is accepted by IFS and its representatives.

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