MONEY MATTERS

WITH ALEX MCKENZIE FUTURE FINANCIAL SERVICES • 4704 8585

New measure is worth considering, but advice is the key before acting

During the last budget the government proposed legislation (now law) that comes into effect on July 1 to allow those downsizing their home to make an additional contribution to superannuation.

The legislation allows for home owners aged 65 or over to contribute up to $300,000 into superannuation from the proceeds of the sale of their home into superannuation.

To be eligible the house must be the family residential property and be owned for at least 10 years. The house must also be exempt from capital gains tax. It should be noted there is no requirement to buy a new home.

This contribution is in addition to other contribution caps and those making it do not have to meet the work test or age limits to make the contribution. The contribution must be made within 90 days of receiving the funds from the sale of the property. The $300,000 limit is for each member of the couple and the downsizing contribution has a one-off life time limit.

This presents an opportunity as many older Australians have a significant portion of their wealth tied up in their residential property and many also live in properties much bigger than they need. This will allow those inclined to do so the opportunity to downsize their property and free up assets to provide for their ongoing needs in a tax free environment.

There are a number of things of that need to be considered before implementing this strategy.

Funds unlocked by downsizing the property are assessable for both Centrelink asset and income tests.

The family home is asset test exempt, so by downsizing you are effectively moving a portion of your assets from an exempt asset to an assessable asset.

This may reduce any pensions that you may be receiving.

Although this contribution is exempt from the $1.6 million super balance contribution restriction (normally you are unable to make non-concessional contributions if your super balance exceeds $1.6 million), the transfer cap remains in place.

This means you are still only able to move $1.6 million to pension phase, any additional funds must remain in accumulation phase. Pension phase earnings are tax free whereas accumulation fund is taxed at 15 per cent on income and capital gains are taxed at 10 per cent.

It should also be noted that there are significant transfer costs associated with downsizing. Sales cost, stamp duty and alike all reduce the funds available to contribute after downsizing. The cost of doing so may limit the effectiveness of the strategy.

This new legislation is an excellent opportunity for many, but before acting, I’d strongly recommend getting advice.

PATRICK CELEBAN

ONE POINT HEALTH • 4732 5188

An overlooked human body system called the ‘lymphatic system’, is basically known as the garbage truck of the human body due to one of its main functions in taking up excess fluids and cells like proteins, waste products, fats, and water from our bodily tissues via the initial lymph capillaries and gradually returning it to the bloodstream after our heart pumps oxygen and nutrients to the tissues.

Some forces that can affect the flow of lymph through our lymph vessels is the pulling of our skin and superficial fascia (layers of connective tissues), the intra-abdominal pressure from breathing and the pumping contractions of our skeletal muscles like the calve muscles pumping fluid out of our leg. These forces are known as external pressures. Oedema is the case in which fluid starts to pool and build up into our tissues and the lymphatics struggle to keep up with that extra load, there- fore, this creates swelling. There can be several reasons why this swelling can result in the first place, some examples are…

• Obesity, as the excess of fat cells can physically restrict the lymph vessels from working.

• Mobility issues such as multiple sclerosis (MS), where the lower limb muscles are almost completely immobilised and are no longer able to pump the fluid back up to its drainage areas.

• Cancer treatment, this can involve removal of lymph nodes which limits the drainage pathways and capacity for the surgical area to drain its fluids. Chemotherapy and radiation can damage the lymphatic vessels and create excessive scar tissues/fibrosis, which can cause blockages in the lymphatics. Swelling in the tissues that has not been drained can progressively get worse the longer it stays there. Cells that are just sitting in our tissues can start to behave abnormally and lead to excessive lay down of collagen (fibrosis) and even fatty tissue, and which can create blockages in our lymph vessels. Over time, the oxygen supply to our lymph vessels can be compromised to the point where the damage to our lymphatic system is irreversible. This progressive condition is known as lymphoedema.