I’m retired, can I deposit my excess cash into super?

Sometimes I have excess funds from investing or from my business cash flow that I park in a term deposit until I have to use it. Can I use my super fund like a bank (for better returns) depositing and withdrawing? I’m 63 and only work from time to time, which I think meets the requirements of being able to withdraw. My super balance is $300,000. The amount I would deposit and then withdraw per year to super would be $100,000. I believe there are limits to what I can deposit, but is this a net sum against withdrawals?

Provided you have satisfied the age 60 retirement condition of release, which requires a termination of employment from age 60, then you can make tax-free withdrawals from your superannuation and make non-concessional contributions of up to $110,000 a year, provided your superannuation balance is under $1.7 million (this number will change to $1.9 million from 1 July 2023).

Provided you have satisfied the age 60 retirement condition of release, you can make tax-free withdrawals from your superannuation and make non-concessional contributions.Credit:Simon Letch

A major benefit of this re-contribution strategy is that you will convert part of the taxable component in your fund to non-taxable.

You certainly cannot offset withdrawals against contributions. Given the apparent short-term nature of these proposed transactions, the only gain I can see is that you may be getting your interest taxed at a lower rate – because your fund would be in accumulation mode with a tax rate of 15 per cent.

This question relates to how my wife and I can address the recent increase in mortgage payments. I am 72, working part-time over the last few years and still contributing to super – my wife is 70 and also works part-time. Together, we have around $1 million in superannuation and draw some income from this. We own a property that is partly rented, we live in the other section, and we owe $450,000 to the bank. Our question is: should we move money from the super account and put it into an offset account to reduce the interest?

You could certainly move the money into the offset account, or even pay off the mortgage. But if you reduce the interest to zero, you will lose any tax deduction to be offset against the rent. Your accountant will need to do the sums for you.

I am single and bought a unit approximately 10 years ago. I have lived in the unit since I acquired it. I plan to move out temporarily for six months to house-sit for a friend. I will rent out my unit for this period, and then move back in. What are the CGT implications?

Thanks to the six-year rule, you can be absent from your principal place of residence for six years without losing the CGT exemption. I see no problems.

More than 20 years ago, my wife and I purchased a house for $220,000 for our disabled daughter, who is on the NDIS. All three of us are on the title deeds. Our daughter pays all the bills but has never paid rent to us. Recently, she has expressed the desire to move to an apartment. Would there be capital gains tax to pay on the $600,000 capital gain when the house is sold? We are in our 80s, and have a part government pension, and superannuation of about $50,000 per year.

You have highlighted the problems that can arise when parents put their names on the title deed of a property to be occupied by their children. There are much better ways of helping them get a loan without going on the deed.

The gross capital gain is $600,000, so your share will be $400,000, which means you will each pay CGT on $100,000 after the 50 per cent discount has been applied. This will be added to your taxable income in the year the sales contract is signed. The tax could be around $25,000 each which is probably not a huge sum for a gain of $600,000.

A one-off capital gain would have no effect on your pension, and provided that Centrelink are aware of this property now, there should be no adverse effects on your pension. You could mitigate the pension slightly by treating $10,000 as a gift to your daughter now, and $10,000 after June 30. This may increase your pension by $1560 a year.

  • Advice given in this article is general in nature and is not intended to influence readers’ decisions about investing or financial products. They should always seek their own professional advice that takes into account their own personal circumstances before making any financial decisions.

Noel Whittaker is the author of Retirement Made Simple and other books on personal finance. Email: [email protected]

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