Ask Noel: does Centrelink recognise prenups?

Having been divorced and losing my home in the process, entering a second marriage was more difficult. However, my partner understood and we agreed the new home was my asset including the debt attached to it. I was already on job search payments, which were paying my mortgage. We entered a contract prior to being married and then afterwards my wife got a job. Her money now paid for bills and food which I had previously struggled with and family helped with.

Now Centrelink say her income has to support me too, which it does, but they will cut my allowance by 80 per cent. But I have a contract with my wife that she is not responsible for the home so how can I pay for accommodation? Why do they not recognise our contract and why must we comply with their blanket policy?

A departmental spokesperson points out that the payment rate of a social security payment is based on a recipient's personal circumstances, including their relationship status.

A recipient is considered a member of a couple if they, and the person they have a relationship with, are married, in a registered relationship or in a de facto relationship.

If a recipient is considered by Centrelink to be a member of a couple, the assets and income of the recipient's partner are included in determining the recipient's eligibility for payment; irrespective of a pre-nuptial agreement or other such contract. This longstanding provision is based on the principle that couples are generally able to share their resources and expenses.

If a partnered person's social security payments were based solely on their own income and assets, this could result in some couples arranging their affairs to obtain a higher level of support than otherwise would be the case. For example, all of the income and assets of a couple could be held by one of the couple, with the partner receiving a full social security payment. In a needs-based social security system, this would not be equitable.

I have an investment loan and the funds are used to buy shares. If I buy stock ABC for $1000 and sell it for $2000 to buy another stock DEF, which was subsequently sold for $1500, what is my outstanding loan balance on which interest is calculated?

I think you are over-complicating it. As long as the sole purpose of the loan is to acquire income producing assets such as shares, and you don't muddy the waters by making withdrawals for private purposes, all interest charges for the year will be tax-deductible. The loan balance from time to time is immaterial.

I turn 65 this year and have a mortgage of $120,000. Do you think I should take this amount out of super and pay off the mortgage, or should I wait until I retire at 70?

If you withdraw a lump sum from your super and pay it off your mortgage your effective rate of return would be the mortgage rate, which I guess is about 5 per cent. Hopefully, your superannuation can do better than that. However, if paying off the mortgage gives you extra cash that would enable you to salary sacrifice to superannuation to the maximum, paying off the mortgage with a lump sum withdrawal may be a good idea.

I read in one of your recent columns that bulk withdrawals from super for over 60s are not assessed as income from a taxed super fund. Does that that mean that if I withdraw $200,000 from a pension in super phase to pay off my mortgage, it would affect my pension? I was under the impression that bulk withdrawals in pension phase do not affect your pension.

If you withdrew $200,000 from your super fund and paid it off your home mortgage, it should have no adverse affect on your age pension. All you are doing is reducing your home loan.

I recently inherited a blue chip share portfolio worth $50,000 and intend reinvesting the dividends where possible. How can I estimate the approximate value of the portfolio 30 years from now?

Over the long term our stock market has averaged 9 per cent a year. If we use that number in our projections an investment of $50,000 today should grow to $740,000 in 30 years. This assumes that all income is reinvested.

Noel Whittaker is the author of Making Money Made Simple and numerous other books on personal finance. His advice is general in nature. Readers should seek their own professional advice before making decisions. Twitter: @noelwhittaker

This story Ask Noel: does Centrelink recognise prenups? first appeared on The Sydney Morning Herald.