Last week was Scams Awareness Week, an educational initiative of the Australian Competition and Consumer Commission (ACCC) as part of their ongoing fight against scammers.
Since the pandemic began, reports of scam victims have increased by 55 per cent, and scammers have extracted over $500 million from Australians in just the last four months.
Don't think you are too smart to be caught.
My friend Roger, who is a retired businessman, went to Harvey Norman recently to get himself a new photocopier. His requirements were that it would be able to be connected wirelessly, and not cost an arm and a leg in supplies. After consultation he settled on a Canon.
He was having a frustrating time connecting it to his wi-fi when a notice popped up on his computer screen purporting to be from Canon. It noted he was having technical issues, and suggested he ring a certain number so Canon technicians could sort out the issue as part of the after-sales service.
It seemed genuine, so he rang the number. It was answered by a non-Australian person who said he was part of the Canon technical team and would need access to the computer to connect the photocopier.
Roger tells me that after an hour of searching in his computer the alleged technician said that there would be a $980 service fee. Roger was horrified and said he would have to think about it - the response was that it must be paid immediately.
Roger hung up and called Harvey Norman to complain about the audacity of Canon to charge an installation fee that was more than the cost of the photocopier.
They were shocked - and gave him the genuine Canon phone number to ring to complain. You guessed it: Canon were horrified as well, but did mention that this was becoming a common occurrence.
And it didn't end there. Roger's computer had been hacked, which meant he spent the next two weeks cancelling credit cards, changing passwords, and advising everybody he dealt with about what was, effectively, a break-in.
I think by now most of us are smart enough not to click on links in emails we don't trust, but this takes scamming to a new level. It seems you now need to be wary about any phone numbers that pop up on your computer, and above all be extremely wary about who gets remote access to your computer.
Another scam that has been doing the rounds for months is the robo-call from "Nicole from the NBN" telling tell you that your NBN is to be terminated tomorrow and you need to press 1 to reactivate it. Having had a few of these calls, I have always wondered what the scammer can gain by asking you to press 1.
The ACCC tell me that pressing that button identifies you as a person who would be likely to accept other calls from scammers in the future.
So stay on your guard. And if you are paying money by bank transfer, be especially careful, because some scammers are now hacking into emails and changing the bank details of people you owe money to.
When you receive a bill, you now need to confirm that the bank details on the invoice are the same as the details held by your bank for previous payments. If not, ring the supplier before payment.
And of course if it's a new payee, make sure you ring the office, using a phone number you know to be genuine, not necessarily the one on the invoice, and confirm the account numbers are genuine.
Noel answers your money questions
Question:I am 63 years and retired. If I make a withdrawal from my superannuation fund do I have to pay tax, and also declare it on my 2020 tax return?
Furthermore, do I need to state which portion is tax-free and which portion is taxable?
Answer: As you are over 60, any withdrawals should be tax-free and nothing needs to be included on your tax return.
Your superannuation will almost certainly have taxable and non-taxable components, but the withdrawal will be made on a pro rata basis based on the two separate amounts- you cannot elect which component is to be withdrawn.
However, that is only relevant when calculating the death tax if your superannuation happens to be left to a non-dependent. Hopefully that's a long way down the track.
Question:I have a self-managed super fund which owns property, and I want to give my tenant, who is a related party, some reduction in their rent because of the current financial situation. I understand that this would normally be a contravention of the superannuation regulations and wonder what the attitude of the ATO would be to this situation.
Answer: The ATO have confirmed that for the 2019-20 and 2020-21 financial years they will not take action where a SMSF gives a tenant - who is also a related party - a temporary rent reduction during this period. Therefore what you propose should be fine.
Question:I was interested in your recent advice regarding children having to pay a lump sum tax on super. We have three children and anticipate no fighting over our wills on our death.
My super fund adviser has advised that the best way to avoid our children having to pay 17 per cent death tax on our super (which we have been told is payable if both my husband and I die at the same time), is to withdraw $300 000 of our funds currently in super and recontribute them in my name as a non-concessional contribution.
We are told that in doing this the money is classified from taxable to tax free. I understand that if our balance is under $1.4 million in a given financial year then we are allowed to make a non-concessional contribution of $300,000, which is what we would intend to do.
I am currently 64 and my husband in 71. We are both in very good health. Do you think this is a sensible and valid thing to do or foresee any issues with this?
Answer: As you point out the taxable component of your superannuation is subject to a death tax of 17 per cent if left to a non-dependent. By withdrawing $300,000 tax free, and re-contributing it free of entry tax you would convert part of the taxable component in your fund to non-taxable.
You cannot nominate which specific components can be withdrawn as they are calculated proportionally. The larger the proportion of the taxable component in your superannuation now, the bigger the sum will be converted from taxable to non-taxable. Just keep in mind that the taxable component that is left in your fund will grow as time passes due to fund earnings.
Question:How would my income level eligibility for the Commonwealth Seniors Health Card (CSHC) be determined in circumstances where I receive property income, but my net taxable income is negative due to interest on borrowings and land tax.
I draw down the minimum 5% in superannuation pension, which is not included in my tax return as I am over 65 and retired; and have other earnings from superannuation balances which are credited to my account but are not drawn down as the funds remain in accumulation mode
What would my adjusted taxable income include?
Answer: Adjusted taxable income includes taxable income, foreign income, total net investment losses, reportable fringe benefits, and reportable superannuation contributions.
It would appear that the net negative gearing loss, will be added back to your taxable income to arrive at your adjusted taxable income. For CSHC purposes your superannuation will be given a deemed amount which will be added to your adjusted taxable income to determine eligibility.
- Noel Whittaker is the author of Making Money Made Simple and numerous other books on personal finance. firstname.lastname@example.org