Can I transfer shares to my children’s super tax-free?

I am 87, a widower with my own home and in good health. I have $700,000 in shares with unrealised capital gains of $220,000. My son aged 62 is a top-rate taxpayer, and my daughter aged 57 is in the second bracket. Both have their own superannuation funds. I am prepared to transfer shares off market to their respective superannuation funds if it helps reduce the capital gains tax situation. Then if I die suddenly it seems to me the children would have the choice of taking the CGT out of my estate or using my cost base and deferring the CGT. Your thoughts would be appreciated.

Any disposal of the shares, irrespective of where the money goes, will be assessed for CGT unless they are pre-CGT shares. In that case, the longer they stay in your name the more tax-free capital growth you will enjoy. Your heirs will inherit these pre CGT shares with a cost base of market value at the date of your death.

Speaking with an accountant is important when passing on shares to children.Credit:Louie Douvis

If you want to start the process before you die, you should sit down with your accountant and work out what shares could be sold to minimise your CGT liability each year. There may be shares with losses that can be sold to trigger a loss to offset capital gains.

The other option is to leave certain shares to your children in your will, in which case your cost base will pass to them, and no CGT would be payable until they decide to dispose of those assets. This could well be after they stop work. It’s a matter of doing the numbers.

My father died recently, and I had the onerous task of sorting through his financial affairs. He had a portfolio of CSL shares and we needed to get detailed records to establish the base cost. We contacted Computershare and were told it would cost $1500 for details of the CSL investment. My financial adviser and I thought that was outrageous. Do you think that’s fair?

A spokesperson for Computershare tells me that the agent who prepared the quote mistakenly thought that you wanted 22 years of investment history rather than 14. Their standard fees are $380 to find seven years of a customer’s transactional information and $55 per year for any additional years. They apologise for the misunderstanding and as a gesture of goodwill will waive the fees.

How does Centrelink treat income received in the year of retirement? I received $46,000 in gross income to December 2022 and retired last December aged 75. I will not receive any further payments from this employment. My wife has previously retired. Will these earnings influence our chances of getting a small, aged pension? We have approximately $817,000 in superannuation and other assets.

A Centrelink spokesperson says that employment income, including termination payments, paid before you and/or your partner claim the age pension are not included in the income test. The income cut-off point for the age pension for a member of a couple is currently $89,211.20 combined per year or $3431.20 per fortnight.

This figure can be higher with the work bonus. The asset cut-off point for a member of a couple who owns their home is currently $935,000 in combined assets. In most cases, the family home is not an assessable asset.

I have a superannuation lifetime pension – the old style one that banks and life insurance companies used to have. It is CPI linked with a widow’s reversionary pension. When I started to fill in the application forms for the CSHC, it specifically mentions the allocated pension type of product, but I can find no mention of my type of super. Your guidance would be appreciated, as waiting on the phone to Centrelink for hours got me nowhere.

I have good news for you. There is no need to declare details of your lifetime pension/defined benefit pension in the application for the CSHC. Only account-based pensions and allocated pensions must be advised as part of the application (as income is deemed for the CSHC) plus Adjusted Taxable Income based on your most recent Tax Notice of Assessment.

• 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 numerous other books on personal finance. Email: [email protected]

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