How a well-intentioned rule is now a smothering weed

This month we sold the last of our residential investment properties, having learned the hard way that residential real estate is a lot more effort than shares for a much lower return. Of course, I asked our family solicitors to do the conveyancing. As part of the KYC rules, they told me, they would have to identify us. When I asked why they would need to "identify" two people they know well, who have been clients for 30 years, the response was, "It's a legal requirement". So we had to produce passports and driver's licences, and jump through all the other hoops associated with getting ID signed off.

Then I was talking to the bank about where best to deposit the sales proceeds and mentioned the possibility of opening an account to keep the money separate from our other funds. I wanted to put some into a 12-month term deposit, ready to pay the capital gains tax. We all know that easily accessible money tends to get spent, and the last thing I want is to get a bill for CGT with no money ready to pay for it. Guess what? The bank, of which we are also long-term customers, said that when opening a new account, they had to formally identify us under the KYC rules.

It's absolute madness, and these rules require fresh ID every two years. You have to wonder how these rules apply to the scammers who make fresh headlines every day. So many scams involve sending money to a fake bank account - the 64-million-dollar question is, what IDs do the scammers use when they open those bank accounts?

But KYC madness sprouts in many other environments too. Our home and contents insurance is due for renewal, so this week we have been having long phone discussions with insurance company staff regarding valuations. Each time they phone me, as well as telling me the call is being recorded, they tell me they must ID me. When I point out that they have called me, and it's I who should be identifying them, their response is, "No, we have to identify you. That's the law."

It's a dilemma, because scammers' modus operandi is often to phone you claiming to be from an institution such as your bank, with the aim of getting your personal details. In any event, my personal details are certainly not hard to find: Google has my date of birth, and every invoice I send out contains my bank details. In this case, because I have been dealing with a person, and they were calling back about the matter, I was prepared to give my date of birth and my full name.

Verifying someone's identity when starting to do business with them does make sense, but the KYC rules have become a weed that smothers the flow of business, provides a new kind of cover for the crooks it was meant to disable, and wastes a great deal of time and energy throughout our society. I think it's time to get it under control in this country.

I am 63 and have $350,000 in super which is invested in cash because I'm concerned about future market downturn. My investment property is worth $670,000 with a loan of $270,000 at 5 per cent - I'm concerned that the interest rate will rise. I am now working part-time, earning $66,000 a year. My thought is to draw $100,000 out of super and use that to reduce the loan. That will give me an effect of 5 per cent return of my money which is far better than my superannuation is doing.

In view of the possibility of further rate rises, and the fact that you are extremely cautious and are prepared to suffer lower returns to reduce the chance of your super having a downturn, I think it's a good idea.

We have a SMSF with multiple accounts in pension mode. After taking out minimum amounts for each account for the financial year can we then take a lump sum out of one of our accounts with the highest taxable component?

No, the lump sum withdrawal has to be proportional, based on the taxable and tax-free percentage determined at the start of the account balance pension.

We received an email from the tax office stating that due to information they have received, we are not able to join the automatic refund of franking credits program for the 2023-24 financial year. This is because we are represented by a tax agent. They also told us that we will need to lodge tax return by 31 October to declare all our income and claim our franking credits. We are not sure if it's genuine because we've heard so much about scams and always worry about clicking on links.

My accountant confirms the information is correct - if you have a registered tax agent you don't qualify for an automatic refund. You have to do a tax return or a refund of franking credit return.