If I die, can my wife still use my credit card?
I have a question about credit card payments and making things easier for my spouse if I die. Most of our monthly bills are automatically deducted from my name’s credit card. I think if I die the bank will cancel that card. We also have a joint account with separate credit cards, but each card has a different number. Is there a way to have a credit card with common names with the same card number and have all those automatic payments continue without needing to be changed?
You cannot have a joint credit card. From the information you provided, it appears that you are the main card holder and your spouse is the additional card holder. If so, normally both cards are canceled when you die.
In order to avoid problems, your spouse should get a credit card in his/her name as soon as possible and gradually transfer automatic payments to this card.
Personally, I am not a fan of automatic withdrawals from the bank account for credit cards. Years ago, a bank withdrew a large amount of money from my account without notice. It took four weeks for me to get a refund.
I am a recently retired Financial Advisor. My wife and I generate income from our pensions and rental properties, so the proposed capital gains tax changes are of particular concern to us. I have been following the ATO’s post-budget materials and comments in the financial press but have been unable to find a clear answer to one question.
If a grandfathered asset, such as a rental property purchased many years ago, is sold after 1 July 2027, will the pre-1 July capital gain, after applying the 50 per cent CGT discount, still be taxed at the taxpayer’s normal marginal tax rates, including lower rates of less than 30 per cent where applicable? Or will this component also be subject to the new 30 percent minimum tax?
I understand that after inflation indexation, earnings after July 1 will be subject to 30 percent minimum tax. My question relates only to the grandfathering component accrued before July 1, 2027. Most of the guidance I have seen, including ATO examples, assumes a taxpayer has a top marginal tax rate and does not address this issue. Can you explain how the legacy component will be taxed?
Technically, the 30 per cent minimum tax rate does not apply to pre-July 1 capital gains, but before you can apply the 50 per cent CGT discount you need to reduce the gain on forward or current year capital losses and quarantined rental property losses.
If you plan to keep it after June 30, 2027, it would be wise to obtain a market valuation as at that time. Capital gains accrued up to that date will continue to be taxed under existing CGT rules.
In other words, after the 50 per cent CGT discount is applied, half of that gain will be added to your taxable income and taxed at your marginal rate.
Any increase in value after June 30, 2027 will be calculated using the new indexed cost base. This indexed gain will also be added to your taxable income.
However, if your marginal tax rate on earnings after June 30, 2027 will be below 30 percent, the new minimum tax will apply and the tax on that part of the earnings will be increased to the effective rate of 30 percent. As you can see it’s very complex, so get expert advice.
Using my unused carry forward contributions from the past five financial years and this year’s cap, I recently made a $100,000 personal concessionary contribution to the superannuation fund. Earlier that same fiscal year, I withdrew $30,000 from my retirement. Will the ATO offset this withdrawal against the contribution and allow me to claim only $70,000 in tax relief? I hope not because I really need the full cut.
Mindy Ding from the Entireti Technical team says it depends on the withdrawal order and contribution. If the withdrawal was made prior to the $100,000 contribution, you may file a valid notice of intent to claim a deduction for the entire contribution, provided that no further withdrawals have been made since then.
If the contribution was made first and the withdrawal followed, you will only be entitled to claim a partial deduction as your pension fund will no longer be able to hold the full contribution.
In one of your recent articles, you suggested that self-funded retirees might want to reinvest in ETFs because ongoing record keeping is often much simpler. I have a hard time reconciling this with the capital gains tax treatment of ETFs. The interplay between capital gain or loss on disposal of ETF units, capital gains imputed through the annual attribution statement, and AMIT cost base adjustments seems incredibly complex. In my opinion, this is a real nightmare to overcome. In comparison, I think the tax treatment of a portfolio of blue-chip stocks is much simpler. Where am I doing wrong?
There has been a lot of publicity about how proposed capital gains tax changes could make record keeping for individual shares much more complicated. The issue is handling gains and losses in a diversified portfolio.
If you own 10 separate shares, each share must be tracked separately for tax purposes. Conversely, if you have an ETF that mirrors the ASX 200, you have a single investment to track, although annual tax returns can be complex.
Whether an ETF or a portfolio of individual stocks is the better option depends on your circumstances. The best approach is to discuss the alternatives with your accountant and decide which will be the simpler and more effective long-term strategy for you.
Noel Whittaker is the author of: Retirement Made Easy and other books on personal finance. Questions: noel@noelwhittaker.com.au
- The advice given in this article is general in nature and is not intended to influence readers’ decisions about investments or financial products. They should always seek their own professional advice, taking into account their personal circumstances, before making any financial decisions.
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Noel Whittaker, AM is the author of Make Money Made Simple and numerous other books on personal finance.Connect with: X or email.
