Question 1: With  the tax changes in the Budget, is salary sacrificing still a sound strategy?

I’m earning $110,000 and try to boost my super by around $10,000.

Answer: Salary sacrificing is still going to make sense for most people, but it is not going to be as attractive as it was. On $110,000, your marginal tax rate will now be an effective 34% (32.5% plus 1.5% Medicare), rather than38.5% (37% plus 1.5% Medicare). The effective tax saving (on $10,000 into super) will reduce by $450 from $2,350 to $1,900. The downside, of course, is that your monies are then locked away in the super system.

With the 19% tax threshold increasing to $45,000, I wouldn’t advise anyone earning less than this to consider salary sacrificing.

Question 2: I’m a 72-year old retiree. I have recently purchased a new home that will be my principal place of residence. How long do I have to sell my current home before it creates a capital gains event? Also, what are the conditions of the downsizer contribution?

Answer: Six months. If it takes longer than six months to dispose of your old home, it gets a bit more complicated. And if you decide to claim the main residence exemption for your new home from the time you move in, your old home will be only partially exempt from CGT.

The main conditions on the downsizer contribution, up to a maximum of $300,000 per person; are:

• Over 65 (there is no maximum age);
• The home you are selling has been your principal place of residence for 10 or more years;
• You must make the downsizer contribution within 90 days of receiving the proceeds from the sale; and
• You must notify your super fund and provide it the relevant downsizer information.

The downsizer contribution is not a non-concessional contribution and does not count against the contribution caps. It can still be made even if your total superannuation balance is over $1.6m. It will, however, count against the transfer balance cap and cannot be moved into the pension phase if you have already reached the cap.

Question 3: What are your thoughts on AGL? It seems pretty friendless in the market, but is yielding around 7.2%. Is it a buy?

Answer: James Dunn is going to look at AGL in next Monday’s Switzer Report.

I would be a little careful with AGL. It is paying the price for its mishandling of the Liddell Power Station, with wholesale energy prices being squeezed by the Government.

According to FN Arena, it is reasonably friendless with the brokers. 1 buy, 4 hold and 3 sell recommendations. Target price of $14.72, about 8.2% higher than the last price of $13.61. Ord Minnett is the high at $17.30 and Credit Suisse is the low at $12.60.

On the dividend, the brokers forecast 99 cents for FY21, falling to 80 cents in FY22 (98 cents paid for FY20). Note in particular the FY21 and FY22 dividends will not be franked.