Question 2 - Tax planning (50 marks) Ned and Linda are 52 and 56 respectively. They have 2 boys Tim and Jim aged 14 and 16. Tim has a physical impairment and needs a wheelchair. Tim wants to go to school to become a structural engineer and Jim wants to study philosophy. The boys want to pay for their on school, or at least contribute as much as possible towards it. Jim found a job working at a retail store but Tim has not been as successful. He has found his disability has restricted his employment options. Ned works as a sales representative for an appliance dealer. He earns $50,000 as a base salary and commissions on top of that. His commission is generally $15,000. His employer offers him extended health care, life insurance and a defined contribution pension plan. Linda has her own business. She is a master seamstress. Her income is $120,000 annually. Her business has been picking up after she was featured on Blog Seam. She is searching for someone to hire to help with order taking and other administrative duties. Ned and Linda haven't thought much about retirement planning or investing. They have been too busy with the kids and Linda has had a major focus on building her business. They provided you with their net worth statement. Ned & Linda's Net Worth Statement Liabilities Assets 342,185 Chequing Account Savings Account Ned's TFSA Linda's TFSA Linda's non-registered account Ned's Employer Plan Home Cottage Cars 7,625 Mortgage 40,000 15,000 35,000 42,150 88,900 2,000,000 625.000 70,000 Total 2,923,675 Liabilities Total Assets 342, 185 Net Worth 2,581,490 Required: Provide Ned and Linda with 5 tax planning suggestions. Include an explanation of how this provides for tax planning - deduct, defer, divide, shelter - and why it would benefit them based on their current financial position. Question 2 - Tax planning (50 marks) Ned and Linda are 52 and 56 respectively. They have 2 boys Tim and Jim aged 14 and 16. Tim has a physical impairment and needs a wheelchair. Tim wants to go to school to become a structural engineer and Jim wants to study philosophy. The boys want to pay for their on school, or at least contribute as much as possible towards it. Jim found a job working at a retail store but Tim has not been as successful. He has found his disability has restricted his employment options. Ned works as a sales representative for an appliance dealer. He earns $50,000 as a base salary and commissions on top of that. His commission is generally $15,000. His employer offers him extended health care, life insurance and a defined contribution pension plan. Linda has her own business. She is a master seamstress. Her income is $120,000 annually. Her business has been picking up after she was featured on Blog Seam. She is searching for someone to hire to help with order taking and other administrative duties. Ned and Linda haven't thought much about retirement planning or investing. They have been too busy with the kids and Linda has had a major focus on building her business. They provided you with their net worth statement. Ned & Linda's Net Worth Statement Liabilities Assets 342,185 Chequing Account Savings Account Ned's TFSA Linda's TFSA Linda's non-registered account Ned's Employer Plan Home Cottage Cars 7,625 Mortgage 40,000 15,000 35,000 42,150 88,900 2,000,000 625.000 70,000 Total 2,923,675 Liabilities Total Assets 342, 185 Net Worth 2,581,490 Required: Provide Ned and Linda with 5 tax planning suggestions. Include an explanation of how this provides for tax planning - deduct, defer, divide, shelter - and why it would benefit them based on their current financial position
