Hi can anyone help me with these questions

Section 1

John and Carol have been married for 31 years. John is aged 66 and Carol is aged 59. John retired last year from his part time job where he had been working with his son for the past 6 years helping him with bookkeeping. Carol is still working as a hairdresser running her own business and earns a net taxable income of around $32,000 p.a. The couple do not have any dependent children living at home.

Assets
Home	$700 000
Contents	60 000
Cars	32 000
Bank account - joint	50 000- interest of 3% p.a.
Shares - John	160 000 fully franked dividend of 2.8% p.a.
Rental property - Carol	340 000 net income after expenses of 3%
Superannuation - Carol	190 000 average return of 5.5% p.a.
Account based pension - John	380 000 income stream of $20 000 p.a.
Liabilities
Mortgage on rental property	$140 000
Credit cards	8 000

Other information:

• Johns account bases pension was acquired 2 years ago from a superannuation account balance of $500 000. At that time 22% of the superannuation account represented a tax-free portion.
• The couples annual living needs total around $60 000. This includes a joint donation to charities of $500, a fee of $800 for preparation of the couples tax return (50/50) and $2000 for the payment of private health insurance.
• Carol is in good health but John is a smoker and has not been well of late.
• Carols mother has recently died and the couple expects to receive an inheritance of around $100 000.

Required:

Calculate the couples assessable assets and income for the purpose of assessing their eligibility for the age pension.

Calculate whether John and/or Carol will be entitled to an age pension.

Determine the couples after-tax income for the current year from all sources and determine whether this meets the couples income needs.

What will be the ramifications on the couples age-pension entitlement upon receipt of the inheritance of $100 000?

Are there any strategies that you can suggest to assist the couple in maximising their age-pension entitlements?

Section 2

One of your financial planning clients, Ms. Julie Simone has asked you to prepare specified personal financial statements on her behalf. Julie is a 33 year-old employed landscape gardener and has a gross income of $55,000 for the 2015 financial year. In addition, Julies employer also contributes 9% of her gross income into a personal superannuation fund that you have set up to fund her retirement.

Fortnightly salary deductions (based on gross income) for Julie are as follows:

Details Percentage

Taxation 20

Personal super contributions 7

Health cover 3

Union fees 2

Other expenditures incurred by Julie for the 2014 financial year are as follows:

Details Amount ($)

Household expenses 10,000

Mortgage loan repayments 12,000

Credit card repayments 8,000

Entertainment expenses 5,000

Julie has also provided a list of her assets and liabilities based on the information that she currently has available as shown below:

Details Amount ($)

Assets -

House and personal effects 400,000

Superannuation 160,000

Car 10,000

Savings account 2,000

Liabilities -

Mortgage loan 250,000

Credit card balance 10,000

Required

• Prepare a personal cash flow statement for Julie for the 2015 financial year based on the information provided.
• Prepare a current personal balance sheet for Julie based on the information provided.

Section 3 -

Brittany is a pilot who likes precision in everything she does.

Brittany is 50 years old and wants to retire in 10 years. She has been doing some reading about retirement incomes. At age 60 Brittany has calculated that she would require $587,574 to afford the type of income stream she desires in retirement. However, Brittany is 50 years old, not 60 she has 10 years to accumulate this amount. Brittany also knows that inflation over the next 10 years will mean that she will need to accumulate more than $587,574.

Brittany has worked out that $789,650 received 10 years from today has the same value as $587,574 today assuming an inflation rate of 3% per annum.

As her financial adviser, you explain that the broad scope of the assumptions which underpin such modelling means that such precision is very difficult to achieve. Nonetheless, any plan is better than no plan even if it is necessary to come back to the plan from time to time and adjust the assumption.

Brittany wants you to build a model which accumulates a nominal $789,650 in superannuation over the next 10 years. She has supplied you with the following information and assumptions.

. Her opening superannuation balance is $367,923

. Her income is $70,000 per annum and will grow in nominal terms by 4% per year.

. Her investment choice inside her fund is expected to earn 6% nominal returns p.a. after fees before taxes.

. Her employer contributes an amount equal to 9.5% of her income to superannuation.

To make the modelling simpler, you will model in calendar years and assume that contributions are made in December each year so that they do not attract investment earnings in the current year.

The missing variable is the percentage of salary sacrificed into superannuation.

Brittany is happy to sacrifice as much as possible to achieve her goal provided she stays within her concessional contribution limit. Brittany uses spread sheets a lot in her work and has found the GOALSEEK function very useful in trying to solve problems like this. Construct a model and answer the following questions.

Required

• What percentage of her salary must Brittany sacrifice into superannuation in order to accumulate $789,650 in nominal terms in 10 years?
• Explain to Brittany how salary sacrificing represents a trade-off between current consumption and future consumption and the factors she should take into account in determining the appropriate level of salary sacrifice. (200 words)
• What other factors besides salary sacrificing might Brittany alter in order to achieve her accumulation goal? (200 words)
• If Brittany was 15 years from retirement rather than 10 years, would her goal of accumulating a real amount of $587,574 in superannuation alter if her desired retirement income stream remained the same? Would her goal of accumulating a nominal amount of $78, 650 in superannuation alter?

Section 1 - Provide Financial Advice to a Client (a) John and Carol have been married for 31 years. John is aged 66 and Carol is aged 59. John retired last year from his part time job where he had been working with his son for the past 6 years helping him with bookkeeping. Carol is still working as a hairdresser running her own business and earns a net taxable income of around $32,000 p.a. The couple do not have any dependent children living at home. ' Assets Home Contents Cars Bank account - joint Shares - John Rental property - Carol Superannuation - Carol Account based pension - John Liabilities Mortgage on rental property Credit cards $700 000 60 000 32 000 50 000- interest of 3% p.a. 160 000 - fully franked dividend of 2.8% p.a. 340 000 - net income after expenses of 3% 190 000 - average return of 5.5% p.a. 380 000 - income stream of $20 000 p.a. $140 000 8 000 Other information: John's account bases pension was acquired 2 years ago from a superannuation account balance of $500 000. At that time 22% of the superannuation account represented a taxfree portion. The couple's annual living needs total around $60 000. This includes a joint donation to charities of $500, a fee of $800 for preparation of the couples tax return (50/50) and $2000 for the payment of private health insurance. Carol is in good health but John is a smoker and has not been well of late. Carol's mother has recently died and the couple expects to receive an inheritance of around $100 000. Required: a) Calculate the couple's assessable assets and income for the purpose of assessing their eligibility for the age pension. b) Calculate whether John and/or Carol will be entitled to an age pension. c) Determine the couple's after-tax income for the current year from all sources and determine whether this meets the couple's income needs. d) What will be the ramifications on the couple's age-pension entitlement upon receipt of the inheritance of $100 000? e) Are there any strategies that you can suggest to assist the couple in maximising their age-pension entitlements? Section 2 - Use of Financial Statements in conducting research and analysis One of your financial planning clients, Ms. Julie Simone has asked you to prepare specified personal financial statements on her behalf. Julie is a 33 year-old employed landscape gardener School of Vocational Business Education and has a gross income of $55,000 for the 2015 financial year. In addition, Julie's employer also contributes 9% of her gross income into a personal superannuation fund that you have set up to fund her retirement. Fortnightly salary deductions (based on gross income) for Julie are as follows: Details Percentage Taxation 20 Personal super contributions 7 Health cover 3 Union fees 2 Other expenditures incurred by Julie for the 2014 financial year are as follows: Details Household expenses Mortgage loan repayments Credit card repayments Entertainment expenses Amount ($) 10,000 12,000 8,000 5,000 Julie has also provided a list of her assets and liabilities based on the information that she currently has available as shown below: Details Assets House and personal effects Superannuation Car Savings account Liabilities Mortgage loan Credit card balance Amount ($) 400,000 160,000 10,000 2,000 250,000 10,000 Required a) Prepare a personal cash flow statement for Julie for the 2015 financial year based on the information provided. b) Prepare a current personal balance sheet for Julie based on the information provided. Section 3 - Salary Sacrifice Brittany is a pilot who likes precision in everything she does. Brittany is 50 years old and wants to retire in 10 years. She has been doing some reading about retirement incomes. At age 60 Brittany has calculated that she would require $587,574 to afford the type of income stream she desires in retirement. However, Brittany is 50 years old, not 60 - she has 10 years to accumulate this amount. Brittany also knows that inflation over the next 10 years will mean that she will need to accumulate more than $587,574. Brittany has worked out that $789,650 received 10 years from today has the same value as $587,574 today assuming an inflation rate of 3% per annum. As her financial adviser, you explain that the broad scope of the assumptions which underpin such modelling means that such precision is very difficult to achieve. Nonetheless, any plan is better than no plan even if it is necessary to come back to the plan from time to time and adjust the assumption. School of Vocational Business Education Brittany wants you to build a model which accumulates a nominal $789,650 in superannuation over the next 10 years. She has supplied you with the following information and assumptions. . Her opening superannuation balance is $367,923 . Her income is $70,000 per annum and will grow in nominal terms by 4% per year. . Her investment choice inside her fund is expected to earn 6% nominal returns p.a. after fees before taxes. . Her employer contributes an amount equal to 9.5% of her income to superannuation. To make the modelling simpler, you will model in calendar years and assume that contributions are made in December each year so that they do not attract investment earnings in the current year. The missing variable is the percentage of salary sacrificed into superannuation. Brittany is happy to sacrifice as much as possible to achieve her goal provided she stays within her concessional contribution limit. Brittany uses spread sheets a lot in her work and has found the GOALSEEK function very useful in trying to solve problems like this. Construct a model and answer the following questions. Required a) What percentage of her salary must Brittany sacrifice into superannuation in order to accumulate $789,650 in nominal terms in 10 years? b) Explain to Brittany how salary sacrificing represents a trade-off between current consumption and future consumption and the factors she should take into account in determining the appropriate level of salary sacrifice. (200 words) c) What other factors besides salary sacrificing might Brittany alter in order to achieve her accumulation goal? (200 words) d) If Brittany was 15 years from retirement rather than 10 years, would her goal of accumulating a real amount of $587,574 in superannuation alter if her desired retirement income stream remained the same? Would her goal of accumulating a nominal amount of $78, 650 in superannuation alter? School of Vocational Business Education