You are a financial adviser and the following information is an extract of data you gathered as part of fact-finding during an initial client consultation for married couple Jacinda (aged 38) and Steven (aged 40) Oldham. Jacinda has opted for a part-time teaching assignment with the local school for the last 3 years. Three years ago, she took a career break from her full-time teaching career given growing children. Steven works as a Senior Clinical Nurse Consultant at a local government hospital. They have two children who are aged 12 and 14.

• The couple would like to know how much money they will receive after paying tax for the year ended 30th June 2020. They would like advice on how to reduce their tax liability in the future.

• The Oldham’s have invested over the years in shares of several banks. They have come to you understand how they should invest in the future. Part of this investment is for the higher education of the children. The balance is to buy a property in the country for the postretirement phase.

• The Oldham’s life goal has been to buy a property in the country and live a quiet life 20 years from now. They have come to you see if they can achieve this goal.

Travelling to and from work- $2,500 (Steven) and $600 (Jacinda)

• Donations to registered Charity $2,000 (Jacinda)

• Teacher Union Membership (Jacinda)………$1,000

Required: 

1. Calculate Jacinda’s and Steven’s after-tax income for the year ended June 30th, 2020. For calculation, assume the figures are of the year 2019-20.

Explain how Jacinda and Steven could reduce their tax liability by splitting their income. Show the effect (calculation) this strategy would have had, if they had split income for the tax year ended 30 June 2020.
 
 

Income for the year ended 30th June 2020: Income type Amount Gross Salary- Jacinda Gross Salary- Steven NAB Joint Savings bank Account (Jacinda and Steven): $50,000 $177,000 $250 Interest NAB bank- 4000 Shares (purchased @ $18 in 2009) Steven $840 (partial franking credit $360) $9,600 (partial franking credit $2,880) $12,600 (partial franking credit $5,400) ANZ bank- 12,000 Shares (purchased @ $10 in 2000) Steven Macquarie Group Limited- 10,000 Shares (purchased @ $22 per share in 2011) Steven