Ask Noel


My wife and I have just had our second baby, and I want to set up some type of trust account for both of them. I have $1000 in a high-interest savings account for them, but it is under my name, at my marginal rate. I read that starting a family trust is not worth the effort unless you have about $100,000 to invest, but I wanted to do something with their money other than have it sit in a high-interest account, although at the moment it has worked out well compared with the stockmarket. Is there an easy-to-manage solution that would enable me to continually add to their savings, minimise tax obligations, and have it work for them? If this were invested in a trust and it matured in 20 years, for instance, I believe they would be hit with capital gains tax. I understand there is no alternative to paying tax but I don't want to spend 20 years trying to set them up and end up giving half of it to the government.

You could hold the money in insurance bonds where capital gains tax is not an issue but the earnings would be taxed at 30 per cent flat. An alternative is to hold the money in your wife's name because the tax-free threshold has risen to $18,200 a year. Another option is to simply pay the money off your housing loan to reduce the term in the hope that you'll be mortgage-free when your children enter the expensive years.

I will soon turn 55 and want to access my super of $80,000. Do I have to take time off work to access it, or can I return to work? What tax would I have to pay if I do return to work?

To access your super at 55, you'll need to sign a statement that you are permanently retired. Having done that, you are entitled to have a change of heart and return to work. There should be no tax on the withdrawal of $80,000, unless you have made large withdrawals in the past.

My son is a member of the Defence Force in South Australia where he is renting a Defence dwelling. He and his wife own a house in Queensland (currently leased), which was their main residence before they were transferred in January 2011. They are considering buying a dwelling in SA that will then become their main residence. They expect to occupy this house for about a year then return to the Queensland house and rent the SA property. They envisage retaining the SA property for five years. How is the CGT liability calculated on the sale of the SA home?

A person can be absent from their residence for up to six years without losing the CGT exemption, but they cannot maintain a CGT exemption for two properties. When they decide to sell one of the properties, they will have to decide which one they will treat as their principal place of residence. The other property will then be subject to CGT under the usual rules.

I'm 34 with an annual income of $110,000; my wife is 31 and earns $45,000. We don't have children. We have a loan of $430,000 on our home valued at $538,000 with fortnightly repayments of $1230. We also have an investment property worth $423,000 with a mortgage of $240,000. The fortnightly repayment is $720. It is rented out at $1782 a month. We have shares and a managed fund of $40,000 and $150,000 in an offset account. We have no other debts. We are thinking of investing in another property of up to $480,000 but are also planning to have a baby later this year. My wife will not be working for at least two years if we have a baby. Is it wise to invest in another property at this stage or should we wait until my wife gets back to work after two years?

You are currently paying almost $32,000 a year in home-loan repayments and this may well be an effort when your wife stops work and you have the added expense of a child. In view of the fact that you already have close to a million dollars invested in residential real estate, I think a better option is to consolidate and look at your options again when your wife returns to work.

Advice is general; readers should seek their own professional advice.

Contact Follow him on Twitter: @noelwhittaker. Questions to: Ask Noel, Money, GPO Box 2571, Qld, 4000, or see

This story Ask Noel first appeared on The Sydney Morning Herald.