Most Australians assume certain financial rules are simple, but in reality, what Australians get wrong about homes, health, and income can lead to costly mistakes later in life.
The Main Residence Exemption
Most Australians assume their home is always exempt from capital gains tax, but the rules are more complex. Income use, absence, or estate transfer can reduce the exemption. The law applies proportionally based on time and usage. Understanding these rules helps avoid unexpected tax outcomes.
Private Health Insurance After 60
The decision to keep private health insurance becomes more nuanced after retirement. The Medicare surcharge often falls away, but rebates increase with age. The real question is access to elective procedures and waiting times. Policy structure and actual coverage matter more than headline premiums.
Franking Credits
Franking credits reduce or refund tax already paid on company profits. They provide modest benefits to working investors but can generate cash refunds in retirement. This makes them a valuable income source in pension phase super. Overreliance can create concentration and structural risks.
Q & A
- Is private health insurance still worth it in retirement?
It depends on access to elective surgery, not just cost or tax benefits.
- Does the six year rule fully remove capital gains tax?
No, it only protects part of the ownership period if exceeded.
- Why is there a two year deadline on inherited property?
Selling within two years can preserve a full capital gains tax exemption.
