You are a financial adviser and the following information is an extract of data you gathered as part of fact finding during an initial client consultation for married coupleAlexWilliamand RachelWilliam:

Name

Age

Gross annual salary

Employment

Alex William

50

$32,400

Alex took a break from the work for a year and has joined as Part time coach with local footy club on 1/1/2019.

RachelWilliam

52

$102,200

Architect, employed as commercial/ residential surveyor with a local firm

TheWilliam's only 16 years sonattends a State Secondary College.

Asset and Liabilities

Assets (Ownership)

Purchase price $

Current valuation

$

Liability (Ownership)

Current valuation $

Home and Contents (Joint)

700,000

----

Mortgage

235,000

Cars (Joint)

Toyota Yaris: 17,000

BMW X1 58,000

----

Credit cards (Joint)

Includes the annual interest cost

6,500

Bank Account:

NAB Savings Account (Joint)

15,000 as on 1/7/2018

Investments:

WisdomTree (Australia and New Zealand) Debt Fund- (Rachel)

Dicker Data Ltd Shares 4,000 - (Rachel)

Galaxy Resources Limited Shares 7000- (Rachel)

Superannuation- (Rachel)

Superannuation- (Alex)

11,000

12,000

15,750

400,000

550,000

Income

Income type (ownership)

Amount p.a.

Joint saving bank account ofAlexand Rachel with NAB: Interest 1.5% p.a.

$440

WisdomTree (Australia and New Zealand) Debt Fund (Rachel)

$780

Dicker Data Ltd Shares- Dividend - (Rachel)

$1,470

+ $630 Imputation credit

Galaxy Resources Limited Dividend - (Rachel)

$910

+ $390 Imputation credit

TheWilliam couplewould like to know their net earnings after paying tax for the year ended 30^thJune 2019. They would also like advice on how to reduce their tax liability in the future.

10 months ago, Rachel invested in equity.She bought 4,000 shares of Dicker Data Ltd at $3.00 per share and 7,000 shares in Galaxy Resources Limited at $2.25 per share. While she is happy about her decision to purchase Dicker Data Ltd, she regrets purchasing Galaxy Resources Limited shares that has come down to $ 1.30 per share. She wants to sell her Dicker Data Ltd shares (expected sale price $7.00 per share) to lock in her profit and has come to you for advice.She does not expect any significant change in share price of both the firms in the coming 1 year.

Alex is concerned about his superannuation.He would like to know how much return his superannuation is making.He has scaled down his coaching job in recent year. He was aggressive investor at young age i.e. in initialyears of job but with increasing age and less remaining years of work life he has redefine himself as a conservative investor and is stressed observing the frequent change in value of superannuation portfolio. In due course he intends to initiate phased retirement,whereby he continues working with a reduced workload, and eventually transition from full-time work to full-time retirement.

Alex and Rachel have decided to save additional money for their retirement. At the end of each year, they will invest any surplus money with 80% invested into Rachel's and 20% invested into Alex's investment. This is in line with Alex's intent to reduce his work in the coming years.

Expenses for year ended 30^thJune 2019:

Itemised expenses per annum:

Travelling to and from work- $2,500 (Rachel) and $1,100 (Alex)

Australian Institute of ArchitectsMembership Fees $1,060(Rachel)

Donations to registered Charity $1,750 (Alex)

Assets and Liabilities

Alex's Superannuation asset allocation

Investment

Asset Allocation

Performance p.a. after tax

Australian Shares

40%

3%

Cash & Fixed Interest

15%

1.4%

International Shares

35%

7%

Property

10%

3.10%

Required:

A.Calculate Alex and Rachel's after-tax income for the year ended June 30^th2019. Explain how Alex and Rachel could reduce their tax liability through splitting their income.Show the effect this strategy would have had, if they had split income for the tax year ended 30 June 2019.

B.Calculate Rachel's capital gains liability if she were to sell herDicker Data Ltdshares.Assume that Rachel will sell her shares and advise her on a strategy she could use to minimise her possible capital gain. Also show the effect this strategy would have.

C.Calculate the expected return for Alex's superannuation portfolio using the return for the year ended June 2019.Explain to Alex why his superannuation portfolio balance fluctuates more than he would like it to.Remember Alex wants to follow conservative investment approach in the remaining working years.

Important Note:

While answering questions that involve calculations, you are expected to describe your approach and explain your calculations. If assumptions are made, theseassumptions must be clearly stated.

Formula to calculate portfolio return:

Riis the return for each asseti;

Piis the proportion of the each asset in the portfolio; and

icounts the number of assets.