Benefits of making a loan, rather than donating, to a family member

We both have a full pension. We have $ 100,000 in the bank and earn little interest. Our daughter and son-in-law have a mortgage on their house, on which they pay 3.54% interest. They would like me to lend them our money to pay off the mortgage and give me the 3.54 percent instead of the 1 percent we earn. Can we do it and will it affect our pension? SS

There could be twists and turns. Your bank deposit is considered a “financial asset” and subject to a presumption along with all stocks, cash, etc. that you might own.

Offering money to a parent can cause presumption problems.Credit:

The Income Means Test “determines” that the first $ 88,000 earns 0.25% and any balance, 2.25%, regardless of what it actually earns. All financial assets are taken into account by the asset resources test.
Whatever the result of the mean test in the lowest pension is the one used.

Being on full pension means you have a combined income of less than $ 8,217 per year and assets of less than $ 401,500, assuming you own your home.

If you “give” the money to your daughter, you would be considered to have exceeded the donation rules, which allow a maximum of $ 10,000 per fiscal year and a maximum of $ 30,000 over five years.

The surplus will then be considered an asset and deemed to earn income for another five years, but will then be removed from the means test. Since you are already receiving full board, this will not give you any benefit, while the downside is that you will not have any right to the money.

If you ‘lend’ the money to your daughter, preferably with a loan contract, it will be classified as an asset and subject to a presumption, while your increased income will be ignored, unless it is accumulated over. your bank account, then spend that.

The $ 100,000 will be your money, as long as your daughter gives it back to you when you ask her for it.

I will soon be 64 and my wife 62 and for family reasons and a change in lifestyle I plan to move north to the Sunshine Coast in the next 12-18 months. We both work full time. I earn $ 67,000 and my wife $ 98,000. I have $ 185,000 with the Public Sector Superannuation Accumulation Plan and my wife $ 265,000 with NSW First State Super. We also have $ 200,000 in low interest bank deposit. We intend to sell our house worth about $ 1.2 million, buy another up to $ 800,000 and invest the rest. We hope to find part-time work, but being in our age range this could be a problem. Do we maintain both super accounts or do we transfer / deposit all funds into one? Can we aim for an annual income of about $ 62,000? HD

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