Belinda, age 37, is a widowed single mum earning $200,000 p.a. (plus superannuation guarantee contributions). Her personal expenses, including mortgage repayments are around $100,000 p.a. She has two young children aged 10 and 12. With no other assets apart from her home, car and contents, Belinda has minimal savings outside of superannuation ($150,000 balance); two weeks of annual leave and three weeks of accrued sick leave owing to her from her employer. She has $100,000 term life and total and permanent disablement (TPD) insurances in her superannuation fund. Whilst Belinda is in good health, she wants to make sure her and the children have protection in the event of her illness, injury or death. Advise Belinda as to:
a. What types of insurance she should have in place? Justify your response.
b. What level of cover of each type of insurance should she have (including the waiting and benefit periods for income protection, if recommended)?
Resident individuals - income tax rates 2020-21 Taxable income Tax on this income 0 - $18,200 Nil $18,201 - $45,000 19c for each $1 over $18,200 S45,001 - $120,000 $5,092 plus 32.Se for each $1 over $45,000 $120,001 - $180,000 $29,467 plus 37e for each $1 over $120,000 $180,001 and over $51,667 plus 45c for each $1 over $180,000 The above rates do not include Medicare levy Non-resident individuals - income tax rates 2020-21 Taxable income Tax on this income SO - $120,000 32.Se for each $1 $120,001 - $180,000 $39,000 plus 37c for each $1 over $120,000 $180,001 and over $61,200 plus 45c for each $1 over $180,000 Taxation of resident minors (2019-20) Income sources Income threshold Tax payable (excludes Medicare levy $0-$416 NII $417 - $1,307 66% of excess over $416 $>1308 45% of entire unearned income Income from a business, employment or deceased estate Normal adult marginal rates Medicare levy thresholds (2019-20) The full Medicare levy is 2.0% of taxable income. A reduced Medicare levy applies where taxable income is below the thresholds in the table below. The following table does not apply if the taxpayer is eligible for Senior and Pension Tax offset (SAPTO), Single taxable income Family taxable income Medicare levy SO - $22,801 50 - $38,474 Nil $22,802 - $28,501 $38,475* - $48,092** 10% of taxable income between thresholds $28,502+ $48,093**+ 2% *For each dependent child or student, add $3,533 **For each dependent child or student, add $4,416 Medicare levy surcharge (MLS) Individuals and families on incomes above the MLS thresholds are liable to pay the MLS for any period during that they, or their dependents, did not have private patient hospital cover. If you have to pay the MLS, it is in addition to the Medicare Levy, Medicare levy surcharge rate Single income for surcharge Family income for surcharge purposes purposes $90,000 $180,000 0% $90,000 - $105,000 $180,000 - $210,000 1% S105,001 - $140,000 $210,001 - $280,000 1.25% >$140,000 >-$280,001 1.5% *Includes taxable income, reportable fringe benefits, total net investment losses, reportable employer super contributions, exempt foreign employment income and certain trust income). **If there is more than one dependent child, these thresholds are increased by $1,500 for each child after the first. Resident individuals - income tax rates 2020-21 Taxable income Tax on this income 0 - $18,200 Nil $18,201 - $45,000 19c for each $1 over $18,200 S45,001 - $120,000 $5,092 plus 32.Se for each $1 over $45,000 $120,001 - $180,000 $29,467 plus 37e for each $1 over $120,000 $180,001 and over $51,667 plus 45c for each $1 over $180,000 The above rates do not include Medicare levy Non-resident individuals - income tax rates 2020-21 Taxable income Tax on this income SO - $120,000 32.Se for each $1 $120,001 - $180,000 $39,000 plus 37c for each $1 over $120,000 $180,001 and over $61,200 plus 45c for each $1 over $180,000 Taxation of resident minors (2019-20) Income sources Income threshold Tax payable (excludes Medicare levy $0-$416 NII $417 - $1,307 66% of excess over $416 $>1308 45% of entire unearned income Income from a business, employment or deceased estate Normal adult marginal rates Medicare levy thresholds (2019-20) The full Medicare levy is 2.0% of taxable income. A reduced Medicare levy applies where taxable income is below the thresholds in the table below. The following table does not apply if the taxpayer is eligible for Senior and Pension Tax offset (SAPTO), Single taxable income Family taxable income Medicare levy SO - $22,801 50 - $38,474 Nil $22,802 - $28,501 $38,475* - $48,092** 10% of taxable income between thresholds $28,502+ $48,093**+ 2% *For each dependent child or student, add $3,533 **For each dependent child or student, add $4,416 Medicare levy surcharge (MLS) Individuals and families on incomes above the MLS thresholds are liable to pay the MLS for any period during that they, or their dependents, did not have private patient hospital cover. If you have to pay the MLS, it is in addition to the Medicare Levy, Medicare levy surcharge rate Single income for surcharge Family income for surcharge purposes purposes $90,000 $180,000 0% $90,000 - $105,000 $180,000 - $210,000 1% S105,001 - $140,000 $210,001 - $280,000 1.25% >$140,000 >-$280,001 1.5% *Includes taxable income, reportable fringe benefits, total net investment losses, reportable employer super contributions, exempt foreign employment income and certain trust income). **If there is more than one dependent child, these thresholds are increased by $1,500 for each child after the first
