How can I get my unclaimed franking credits?

I refer your recent article about applying for franking credits and notice I have over $2000 dating back to 2014 when we stopped putting in tax returns – can I claim these unclaimed franking credits, and what should I do for future tax years?

You can claim the unused credits via the ATO’s website, but for future refunds you will have to complete a form each year. The link with claim instructions for doing it online through MyGov, over the phone or via post can be found here.

The criteria for automatic franking credit refunds can all be found on the tax office’s online portal. Most people don’t receive it automatically because a tax agent lodged their last tax return. Once an individual lodges a form themselves, the tax agent link will be removed, and they should fall into the automatic system.

Go to the tax office’s online portal for information on how to claim old franking credits.Credit: Simon Letch

I am 61 and semi-retired. I have $600,000 in super, and we have $50,000 left on our home mortgage. We also own an investment property worth $800,000 with an outstanding loan of $400,000. I’m wondering whether we should use my super to pay off the investment property or sell it, keeping in mind the potential tax implications. My thought is that by holding on to it, we could receive a steady rental income of around $2200 per month.

A major issue is the returns potential of the property and the performance of your superannuation fund. A good superannuation fund should be producing at least 7 per cent per annum so by withdrawing $400,000 to pay off the mortgage you could be losing $28,000 in super in year one – of course this would increase as the fund continues to grow.

You also need to think about what capital gains tax you would pay if you sell the property. If the property has potential, your best option might be to hold it and leave the loan as is so the rent covers the interest cost. With this strategy, you should enjoy both the capital gain on the property and on your super.

My wife and I are aged 77 and 69, respectively, and we currently receive a part-age pension. We own an investment property valued at $340,000, generating approximately $4000 annually. We recently received an offer to sell this property, which would leave us with around $200,000 net after paying off the mortgage. If we proceed with the sale and deposit this amount in the bank, we are considering using $100,000 to purchase a new car and caravan, leaving a remaining $100,000 in savings.

Could you clarify how this cash profit will be assessed by Centrelink if we retain it in our bank account? Additionally, would it be beneficial to transfer this balance to our superannuation account, which currently holds $180,000?

The net value of the investment property is currently assessable under the assets test (assuming the mortgage is secured against that property and not the family home), and by selling it and using the $200,000 as you’re planning, you would essentially be converting one assessable asset into other assessable assets, such as a vehicle and cash in the bank. Therefore, your pension entitlements should remain unchanged.

As time passes you could gradually reduce the value of the vehicle for pension purposes. Additionally, you may consider spending on non-assessable items, like home renovations or travel, to manage your assessable assets.

I have a small parcel of inherited shares worth about $30,000 and would like to transfer them into my superannuation fund. What’s the easiest way to do this?

If the inherited shares were acquired by the deceased after the introduction of capital gains tax (CGT), you will be liable for CGT based on the original cost base of the deceased when you dispose of them. The executor of the will may be able to provide this.

Without knowing more about your personal situation, here are some general options:

If you are still working, you could consider making a concessional contribution to your super, which may help offset any CGT payable. If you are retired, and between 67 and 75 years old you could make a non-concessional contribution, which would not incur entry tax.

Noel Whittaker is the author of Retirement Made Simple and other books on personal finance. [e-mail]

• 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.

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