Donation rules and their impact on the old age pension
My 89-year-old mother, in good health and in good health, receives old age pension and moves in with us. She is expected to make approximately $ 600,000 from the sale of her house and is keen to give it to her two grandchildren equally during her lifetime. She fears that they will be permanently excluded from the housing market. She has no other assets. Would this transaction have tax consequences and would her old age pension be affected?
Suppose the proceeds from the sale of the house are $ 580,000 (after fees), and she gives the children $ 5,000 each now, plus an interest-free loan of $ 10,000 that will be forgiven in July of this year. next year. That would mean his taxable assets would be $ 570,000 this fiscal year and $ 560,000 in July of next year after the loan was canceled.
The result is an old age pension this fiscal year of $ 718.50 per fortnight, which would represent a reduction of $ 249 per fortnight, or $ 6,474 per year (although it would increase again in July of next year after the cancellation of the loan).
The remaining donation of $ 560,000 would be held as a deemed asset for five years and then cease to exist, after which it would have to revert to the old age pension.
In short, it will cost about $ 32,000 in lost pension over the next five years to donate.
All she has to do is keep at least $ 32,000 on hand for expenses and donate the balance immediately.
My wife has a portfolio of stocks with an unrealized capital loss of about $ 60,000. She has stage four cancer, with a prognosis of death of about 12 months. I also have an equity portfolio, but it has unrealized capital gains greater than $ 60,000. Is there a way I can fix our tax affairs so that the $ 60,000 in capital losses don’t die with it?
If the shares are sold before her death, the capital losses will die with her, but if she now has shares some of which have a capital gain and others a capital loss, she could sell enough now to allow the deductions to be made. gains losses.
If the remaining shares were left to you, you would get its cost base back, which would mean that if the value is now less than the cost base, you could use the losses against some of your own unrealized capital gains.