I had an interesting conversation with my father-in-law today. It really made me think about how I should assess advice that I receive in the future. I have always be wary of any advice that I receive from anyone, except from my wife which I accept faithfully. However, my father-in-law is someone that are willing to accept advice from an un-authoritative source, and is happy if he got the advice from a single source as well. He is also happy to pass on these advice as gospel.
He is retired from his work and has been for a number of years. My mother-in-law is retired as well, and is collecting the old age pension from the government. During the conversation, he gave us the following advice,
If I win tattslotto, you shall get an equal share among your family and you will not have to pay any tax on it because I have registered all my lottery tickets to the family.
Essentially, he is saying that if he wins any money, he will share the money among the family members, and because the family has bought the ticket, the winnings are not subjected to tax. He said that if family did not buy the ticket, the shared winnings would be subjected to gift tax as the family members would received the tattslotto winnings as a gift.
I heard this, and proceed to ask him where he got his advice from. Apparently, he got this advice from this financial planner and some of his friends.I get the feeling that my parents-in-law's situation is totally different from ours and could actually be applicable to them.
Looking at the advice on the surface, it does not sound right. The winnings itself is not taxable, as this advice from the ATO states. Also if he does win, and then distribute the winnings among the family members, the ATO is also clear on it not being taxable as the family members would receive it as gift. Gift is only usually taxable if it is received within your work environment. For example, you receive a bottle of scotch from your client because you did an excellent job on the project. I believe that the bottle of scotch is subjected to fridge benefit tax.
This conversation made me think about the source of information which we receive on a day-to-day basis, especially on the financial matters. It is really essential that the advice that we received are supported from several sources, possibly sources with some authority in the matter.
This goes from the information that I write about on this blog. I am probably the one person whose authority on finance is next to zero, so do not depend on it. I am only exploring financial ideas and methods. If you gained some positive insight of your situation from my articles, then I am really happy for you. However, before acting on these ideas and methods, please seek independent advice from a few people who know what they doing.
Good advice is the one thing you don't want to be a lottery.
photo by Uffe Nielsen