FINM1401: You are expected to discuss: “the age pension, compulsory superannuation and voluntary savings: Personal Wealth Management Assignment

Assessment task

Part 1: PowerPoint Presentation (PPT)

Topic: “The three retirement pillars in Australia” is globally acclaimed.

You are expected to discuss: “the age pension, compulsory superannuation and voluntary savings”. This PPT is to be used by your colleagues and yourself for presentation to an audience with limited financial knowledge. The PPT should be no more than 10 slides and should address all the above issues.

Part 2: A financial and taxation case study

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 a married couple.

Sue, aged 48 and Paul, aged 49 have two daughters- Leena aged 17 and Reena aged 15. Sue works as a part-time teacher in a secondary school and earns a $26,000 p.a. salary (plus minimum superannuation guarantee contribution). Paul works as a dentist and earns $145,000 (plus minimum superannuation guarantee contribution). Paul is anxious about their
post-retirement financial situation. The couple has approached you for financial advice in respect of reducing the tax payable and their retirement planning.

Required:

A. Calculate Sue and Paul’s annual after-tax income for the year ended 30th June 2022. Also, explain how Sue and Paul could reduce their tax liability by splitting their income. Show the effect of this strategy if they had split income for this current tax year. Please provide a brief explanation of the concept of the splitting of income (not more than 100 words) as an effective strategy for the couple.

B. The couple is happy that they invested in the holiday home, as the property
market value has shown good appreciation. Although they claimed to have done this investment to save tax, they are wondering what is a “negative gearing” tax strategy.

Please provide the couple with an explanation of gearing and negative gearing using their current context. Support your explanation with calculations. How does owning a negatively geared property save tax for this couple? Whose name should the investment property and mortgage be held to avail the maximum benefit of negative gearing?

C. Calculate the expected return for Sue’s superannuation portfolio using the return for the year ended 2022. Explain to Sue why her superannuation portfolio balance fluctuates more than she would like it to.

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