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 couple Alex William and Rachel William:

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.
Rachel William	52	$102,200	Architect, employed as commercial/ residential surveyor with a local firm
The Williams only 16 years son attends 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 of Alex and 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

• The William couple would like to know their net earnings after paying tax for the year ended 30^th June 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 initial years 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 Rachels and 20% invested into Alexs investment. This is in line with Alexs intent to reduce his work in the coming years.

Expenses for year ended 30^th June 2019:

Itemised expenses per annum:

• Travelling to and from work- $2,500 (Rachel) and $1,100 (Alex)
• Australian Institute of Architects Membership Fees $1,060 (Rachel)
• Donations to registered Charity $1,750 (Alex)

Assets and Liabilities

Alexs 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:

1. Calculate Alex and Rachels after-tax income for the year ended June 30^th 2019. 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.
2. Calculate Rachels capital gains liability if she were to sell her Dicker Data Ltd shares. 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.
3. Calculate the expected return for Alexs 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, these assumptions must be clearly stated.

Formula to calculate portfolio return:

• Ri is the return for each asset i;
• Pi is the proportion of the each asset in the portfolio; and
• i counts the number of assets.

[R] = R,P, [R] = R,P