Question
Paul and Jane are a couple in their late-thirties and are looking for financial advice to improve their financial position. Jane is an accountant and
Paul and Jane are a couple in their late-thirties and are looking for financial advice to improve their financial position. Jane is an accountant and earns a salary of $130,000 p.a. (before tax) while Paul works as a software engineer and earns $95,000p.a. (before tax). Paul currently works part-time and take care of their two children, Amy, aged 5, and Jake, aged 7.
The couple does not have any private health insurance.
The couple's investments are shown as follows:
| Item | Market value | Ownership |
|---|---|---|
| Savings account (interest rate 4.40% p.a) | $50,000 a year | Jane |
| Real Estate Investment Property (weekly rental income) | rental income weekly : $750 rental income monthly: $3000 | Owned jointly (50% each) |
| Platinum International managed fund (acquired in March 2018 for $80,000; funds distributed are $2,000 this year in total which also includes $600 fully franked dividends) | $100,000 | Jane |
| Shares | ||
Tech stocksacquired 6 months ago for $50,000 | $75,000 | Jane |
Mining stocksacquired in April 2019 for $50,000 (fully franked dividends of 5% p.a.) | $85,000 | Jane |
*assume any applicable company tax rates are 30%.
The couple is looking to sell the entire share portfolio in a couple of months to invest in higher-yield opportunity but are concerned about the tax implications. Jane also has a carried-forward capital loss of $20,000 from 2 years ago. The couple is concerned by the large amount of tax they are currently paying and want to explore strategies to reduce their tax liability and improve their financial position.
The couple also incurred the following expenses during the year
| Expenditure | Paul | Jane |
| Work related expenses | $1000 | $1,200 |
| Travelling to and from home | $700 | $700 |
| Professional Development | $750 | $1,000 |
| Donations | $300 | $500 |
| Living costs | $19,000 | $19,000 |
| Tax agents' fees | $400 | $500 |
| Income protection insurance | $180 | $350 |
- Determine the net tax payable for the 2022/2023 financial year (year ending 30 June 2023) for both Paul and Jane (8 marks)
- The couple is concerned with the amount of overall tax they are paying. Based on the information provided identify and discuss some of the tax-effective strategies that the couple could use (at least 3 strategies should be discussed).(3 marks)
- If the shares are sold (assume the selling price is current market value as provided), calculate the net assessable capital gain that would be included in Jane's assessable income for the year.(3 marks).
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Auditing An International Approach
Authors: Wally J. Smieliauskas, Kathryn Bewley
6th edition
978-0070968295, 9781259087462, 978-0071051415
