Reference no: EM133061610

Nicky Wu has come to you for advice regarding her age pension entitlement. Nicky informs you that she is 67, single, an Australian resident and has lived in Australia for the past 15 years.

Nicky currently works part-time as a librarian and earns $18,000 per year. She also provides you with the market value of her assets and liabilities, and the yearly returns generated from these assets as follows:

Assets / yearly returns	Amount ($)
Personal residence (family home)	360,000
Contents	18,000
Car	12,000
Bank account         - interest income of $500 (2%)	25,000
Superannuation     - return of $9,250 (5%)	185,000
Rental property      - net return of $8,400 (3.5%)	240,000

Liabilities	Amount ($)
Mortgage on rental property	110,000

 REQUIRED

1. Advise Nicky whether she is eligible to receive the age pension or not. Justify your answer.
2. For all remaining questions, assume that Nicky is eligible to apply for the age pension. Calculate Nicky's fortnightly age pension entitlement using the asset test. Show your workings.
3. Calculate Nicky's fortnightly age pension entitlement using the income test. Show your workings. 
4. Based on your answers to (b) and (c) above, Nicky's fortnightly age pension entitlement would be: $______________
5. Suggest two ways that Nicky might be able to improve her age pension entitlement: 
6. What income would Nicky be required to include in her assessable income for taxation purposes for the current income year? State both the income and the $ amount.