PART B: CASE 2 Taxpayers at retirement age

Inder Muller, aged 58, recently retired from his employment as chief accountant of Moon Light Pty Ltd, after 17 years and 4 months of service. Inders wife Belinda, aged 59, is currently running a small newsagency. Inder and Belinda visited you to seek an advice on various retirement planning options specified below. Inder and Belinda both are covered by private health insurance.

1) Regarding Inders Termination payment

Inder received the following payments from his employer Gross salary from employer from the 1st of July 2018 to 30th of May 2019 Genuine redundancy payment received on the 30th of May 2019 Unused annual leave Unused long service leave

(16 Marks)

$57,000 $73,000 $26,000 $12,800

Advise Inder how much tax is payable on the above termination payments. Assume no deductions to claim. You must clearly identify any ETP tax offset.

2) Regarding Inders Termination payment & Superannuation (16 Marks)

Inder currently has superannuation valued at $582,000 with the Suncorp (complying Super fund). The total amount includes the following elements;

Tax free component Element untaxed in the fund Element taxed in the fund

Required

$25,000 $207,000 $350,000

Advise him what would be the tax consequences of withdrawing his super prior to his retirement age, including all options available to him.

3) Regarding Belindas Business (18 Marks)

Belinda has started the newsagency business 3 months ago. She would like to get an advice on the tax benefits available for her new business. The expected business turnover for the financial year ending 30th of June 2019 is $500,000 including GST.

She has purchased the following assets for the business. Photocopy machine for $5,500 including GST on the 15th of Feb 2019 and was ready to use on the 1st of March 2019. Motor vehicle purchased on the 1st May 2019 for $68,800 including GST, to be used solely for business purposes.

She wishes to opt for the Small Business Entity (SBE) option but Inder is unsure whether this is the good choice for them and what benefits will become available when choosing the SBE. Advise Belinda and Inder the following.

• Eligibility for SBE;

• Concessions for trading stock;

• Asset pools; and

• Capital gains tax concession.