I’d like to give my parents $400,000. Will it affect their age pension?

I’d like to give my parents $400,000 to do with as they please, as I’m in a good financial position already. They are both on the age pension and don’t own any assets. They are 80 and should have plenty of years in them. Mum does mention cost-of-living is high, so perhaps they can place it in a fixed 5 per cent term deposit and spend the interest, but they are concerned they will lose the pension.

I’ve read up a little, and it looks like they can accept the money without the asset test being an issue, but I don’t understand what happens to their income. Does it reduce, or can they keep the full amount they receive as a couple and still get the income from a term deposit?

Christmas will come early for one reader’s parents, but how should they use it? Credit: Getty

As they have no assets, they will be tested as a non-homeowner couple. The threshold at which the pension would start to reduce for the assets test is $722,000, and for the income test $372 a fortnight. The $400,000 gift would be regarded as an asset and given a deemed value of $266 a fortnight for the income test. The pension should be unaffected as they would still be below both thresholds.

I have researched SG vouchers and I don’t understand them. Apparently, if your employer forgets, short pays, or deliberately doesn’t pay any of your super in the right year, the Australian Tax Office may recover some of these funds and pay them to your super account in the form of a “super guarantee voucher”. Hostplus is my super fund. The item shows as an entry in the deposit column.

My question: is this amount regarded as a concessional, non-concessional contribution or disregarded?

AMP technical strategy manager John Perri says SG vouchers are treated as concessional contributions – they are effectively SGC shortfall amounts paid to the ATO by employers who have not met their SG obligations, and in turn, are paid to the employee’s super fund.

My wife, 64, has not worked full-time or part-time for a year or so. She has come into an inheritance of $100,000 due to the passing of her mother and would like to put it all into her small super account. I have received the age and defined benefit pensions for a year now. Can she put it all into super? We are getting on well with our money now.

It’s the perfect strategy. Because she is not of pensionable age, the money will not count as an asset against your pension unless she starts to draw an income from it – she can still access it any time if she needs.

We want to downsize from our home and contribute the proceeds to our self-managed super fund (SMSF) – we have owned the property for 12 years, but it was a rental for the first four years. Six years ago, we sold our previous home and moved to this property as our main residence. I am on a pension and we are Australian citizens. I checked on the ATO website, which states you need to own the property for 10 years and have lived in it. What is the required time to be a resident? I am 69 and my wife is 66. I have $415,000 in super and my wife has $35,000.

You qualify – the requirements are that you must have owned your property for a continuous period of at least 10 years. This is usually measured from the date of your original purchase settlement to the settlement date when you sell it. The property being sold must be your main residence at the time of the sale, or it must be partially exempt from capital gains tax (CGT) under the main residence exemption. But you can contribute the money to superannuation without using up the downsizing contribution. Remember, non-concessional contributions can be made to age 75 provided your total superannuation balance is less than $1.9 million. Under the bring-forward provisions, you could each contribute up to $360,000, provided you have made no other non-concessional contributions in the past 12 months. This will enable you to save up the downside contribution if you need it when you are older.

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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