Personal Finance
Newcastle Herald
Thursday April 17, 2008
Q I have a debt of $6000 owing on a credit card and no cash reserve. I am considering organising a personal loan of $10,000 to pay out this debt. The $4000 balance will be used as a cash reserve and to finish improvements to my investment unit. I am interested in your thoughts on this strategy to pay off the credit card debt.
A The interest on that portion of the loan used for the unit renovation will be tax-deductible so it would be better for tax purposes to keep it separate from the personal loan. My preference would be for you to pay the credit card loan back at $300 a month which will see it paid off in less than two years, and at the same time take out a separate loan for the renovations.Q I will turn 65 in August this year. I am self-employed and work part-time; my taxable income last year was $17,773. At this stage I intend to continue working part-time after reaching retirement age. Will it be possible for me to receive a health care card from Centrelink and what should I do to maximise my chances?A Your adjusted taxable income will need to be as follows: single $50,000 annual limit, partnered (combined) $80,000 annual limit, partnered illness separated $100,000 annual limit. The formula for adjusted taxable income (NOT taxable income) is normal taxable income plus the value of assessable fringe benefits above $1000 plus any target foreign income received plus net rental property losses. If you are eligible to claim an age pension entitlement, the pensioner concession card will be automatically issued.Q My elderly parents (82 and 78) live in their own home but wish to sell and move closer to me perhaps renting, but they are concerned how this will affect their pension. They currently get a Department of Veterans Affairs (DVA) pension and a small amount of UK pension. After sale they would end up with $260,000 not enough to buy another property. If they invested this amount for around 6 per cent how would their pension be affected? They do not have any other assets.A They would be classed as a non-home-owner couple and based on the information given should continue to be eligible for the full pension. As the deeming rate is now up to 6 per cent on balances in excess of $65,400 you should encourage them to investigate the online accounts offered by the major financial institutions paying around 7 per cent. It may give them peace of mind to talk to the Veterans Affairs Network (VAN) people at DVA before signing any contracts.Send your questions to noelwhit@gil.com.au. Readers should seek their own expert advice before making financial decisions.
© 2008 Newcastle Herald