Superannuation & Retirement Planning- Case Study Analysis- Report Writing Assignment

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Report Writing Assignment:

Task:

Task 1: The Nathan and Mary Davidson case study — Superannuation contributions

Section 1: Superannuation contributions

Read the case study and fact finder, then:
1. answer the six (6) questions they have about superannuation contributions
2. answer Question 7 by documenting the strategy you would recommend to meet their needs and objectives
3. complete a cash flow table showing their financial position should they take your advice.

Section 2: Engaging your clients
Re-read the case study for Nathan and Mary, then:
1. answer the six (6) questions relating to client engagement at each stage of the financial planning process.

Task 2: The Kellie and Jeremy Wallace case study — Superannuation benefit payments
Read the case study and fact finder, then:
1. answer the five (5) questions they have about superannuation benefit payments
2. answer Question 6 by documenting the strategy you would recommend to meet their needs and objectives
3. complete a cash flow table showing their financial position should they take your advice.

Case study 1 — Nathan and Mary Davidson
You are a financial planner for AFS licensee EANWB Financial Planning. Nathan and Mary Davidson have been doing their own research into their retirement planning and recently attended one of your firm’s retirement seminars. Following this seminar they spoke with you about their concerns that they may not accumulate enough money in superannuation to fund their retirement.
You meet with them and during your initial meeting you provided them with some basic information including a fact finder for them to fill out and then organised a second meeting in which you collected more information on their current financial situation and spent time clarifying their needs and objectives. A summary of their financial situation and the fact finder and risk profile is shown below.

Current situation
Nathan (age 54) and Mary (age 52) are married and have two children, Jonathan and Sarah who are nearing the end of their schooling.
They own their own home, valued at $600,000, and have recently received an inheritance from the estate of Mary’s mother.
They have deposited an amount equal to their outstanding mortgage into their offset account reducing the amount of the outstanding loan to nil. They still have access to these funds. However, they do not want to touch these funds and will use it only as an emergency account.
Nathan is a full-time sales representative for an agricultural supplies company. He earns $140,000 p.a. plus superannuation guarantee (SG) contributions from his employer paid into the employer’s default fund. Mary is primarily a self-employed marketing consultant and has net business income of $65,000 p.a. She also works as a contracted employee in a mining engineering company. Her hours vary but typically she earns about $5600 p.a. plus SG paid into the employer’s default fund. Jonathan and Sarah attend a private school and Nathan and Mary pay $7000 p.a. in fees, uniforms, books, school trips etc. The only other assets they have are their two cars.

Superannuation
Nathan has $270,000 in his superannuation fund and Mary has $99,000. They are both invested in the default balanced option. Further details of their superannuation are in the fact find.Neither Nathan nor Mary have made any additional contributions to their superannuation fund. Nathan’s employer will allow salary sacrificing to superannuation without impacting on any other employee benefits and will maintain his SG contribution based on his pre-salary sacrifice income. Mary’s employer will not allow her to salary sacrifice to superannuation but does make SG contributions to Mary’s superannuation fund. Nathan and Mary are happy with their current superannuation funds and the underlying investments they are invested in. They do not wish to receive advice in regard to changing their funds or investment portfolios.

Section 1 questions
Nathan and Mary have a number of questions about superannuation contributions following their research and the seminar they attended. Respond to their questions basing your answer on their personal situation. You may be required to re-educate the clients where they are confused or misunderstand the superannuation rules.

Nathan and Mary Davidson’s questions

Question 1
Nathan and Mary are confused concerning the tax deductibility of superannuation contributions. They ask: ‘Are we correct in assuming that we can both claim personal tax deductions for any superannuation contributions we make?’ Could you explain the tax deduction rules that apply to our situations?’

Question 2
Nathan asks:
‘As Mary’s income from employment is $5600, what do I need to do to claim the spouse contributions tax offset?’

Question 3
Mary comments that as Nathan is the main salary earner they should consider using Nathan’s income to make contributions and asks:
‘How does Nathan make tax-effective contributions to superannuation from his income if he cannot claim the contributions as a tax deduction?’

Question 4
Mary asks:
‘We read an article recently that said Nathan can split the superannuation contributions he makes to my superannuation account. Is that correct and how does it work?’

Question 5
Nathan is concerned about tax payable if they invest the balance of the inheritance money into superannuation. He says:
‘I’ve heard that some people have had to pay tax at the highest tax rates on superannuation contributions. Can we be sure we won’t fall into that trap?’

Question 6
Nathan asks:
‘What would be the outcome and any tax consequences for me if I salary sacrifice an amount equivalent to our excess income?’

 

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Posted on : February 06th, 2018
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