I’m just about to turn 75. Is it too late to top up my super?

I was wondering if you could clarify the bring-forward rule for non-concessional contributions to super. My friend is 74 years old and turns 75 on June 19. She wants to activate the bring-forward rule and put $360,000 into super. The family has phoned Australian Super twice and has been given different answers. One was told yes, while the other was told no. Then I rang Australian Super and they said yes. Hoping you can clarify this for us.

Mindy Ding of AMP Technical says the bring-forward rule can be triggered if an individual is 74 years (or younger) at any point during the financial year. Provided your friend’s total super balance last June 30 was below $1.66 million, they can make non-concessional contributions of up to $360,000 this financial year.

Topping up your super can be beneficial, but it’s important to ascertain if it makes financial sense.Credit: Simon Letch

My husband (age 63) and I (62) have both retired and each have $800,000 in our superannuation pension accounts. We have an $800,000 investment property we are looking to sell in the not-too-distant future, which would provide a profit of $400,000, leaving us with net capital gains of $100,000 each.

Would it be possible to reduce our pension account balances by $310,000 each so they are under $500,000, to enable us to contribute up to five years of catch-up concessional payments to our (still open) accumulation fund, thus eliminating CGT? Can we then both open another pension account?

It’s possible with some planning. You’ll need to have your super balances under $500,000 by June 30 next year, and it may be best to readjust them to, say, $450,000 in case any earnings are added to the fund and dated back to June 30.

Having reached the age of 60 and retired, you can make withdrawals without limit from your fund tax-free, and then you have until age 75 to put money back into your fund. Keep in mind the appropriate date for capital gains tax purposes is the date of the sale contract, not the date of settlement, and the sale will need to be deferred to the next financial year.

The cream on the cake is that this withdrawal-and-recontribution strategy will reduce the taxable component of your fund and so will mitigate some of the future death tax should the money be left to a non-tax dependent such as an adult child.

Can one evade the 17 per cent death duty tax on super by withdrawing and redepositing as a non-concessional contribution?

See the answer to the previous question. The problem with using the recontribution strategy to avoid the death tax is that you cannot nominate which tax components you withdraw from, and once the recontribution is made, the earnings form part of the taxable component.

It can certainly reduce the taxable component, and with it, the death tax, but a much better strategy is to instruct your attorney to withdraw all your super tax-free when your death is imminent and deposit the money to your bank account.

I am 86 and have three children over 60 and six grandchildren over 30. I’m thinking about estate planning and think it may make sense to gift sooner rather than later. I have Commonwealth Bank shares worth just over $400,000 and I am thinking about transferring them progressively after some family discussions. I would like to hear your thoughts on this proposed strategy.

I think it’s a great idea to gift with a warm hand where it’s appropriate, and transferring the money progressively after family discussions is a great way to educate the family about the value of shares and to help them decide what they would do with the shares if they get them.

The first issue for you is capital gains tax. Shares have a unique ability to be sold in part, so you could talk to your accountant to make sure any capital gain is minimised and only transfer the shares in small parcels.

If most of the shares have been acquired by dividend reinvestment, CGT may not be as bad as it may seem at first glance. You may well find all the children will have different uses for the money, so for some, transfer of the shares may be the best option, and for others, selling the shares to provide cash may be better.

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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