What type of contributions can the employer and robert make

Assignment Help Financial Econometrics

Reference no: EM132317435 , Length: word count:900

Case Study

You are now an Authorised Representative of Independent Financial Planning.

New clients Robert and Jillian Buckett both senior retail managers make an appointment to come and see you at your office. Robert's date of birth (DOB) is 1 Jan 1976, he is married to Jillian (DOB 5 Feb 1973) and earns a salary of $180,000 p.a. inclusive of super. Jillian works full time also and earns $190,000 p.a. They have a waterfront home with a mortgage of $500,000 and have two children. Robert would like to retire early on an income of $100,000 p.a. in retirement.

Robert and Jillian are already thinking about accumulating a ‘nest egg' for their retirement.

Neither Robert or Jillian understand superannuation. They have heard a lot of bad news lately about superannuation, the stories of the bank royal commission, changes to legislation, poor investment returns and the fact that it locks your money away. Robert and Jillian want to know whether superannuation is the best way to achieve their goal for retirement or not. They want specific advice from you in writing.

Assessment Criteria:

• Marks will be awarded as indicated on the questions.
• You will be rewarded for the technical content and accuracy of your advice.
• As the question requires advice to be given to a client you must maintain a client focus and explain your recommendations clearly in a manner that the client will understand.
• As the client does not have expert superannuation knowledge all technical aspects should be explained.

A report style is to be used as detailed in Summers, J. & Smith, B. 2004, Communication Skills Handbook, John Wiley & Sons, Milton.

Questions:

1. Robert and Jillian do not understand superannuation. Explain to them the advantages and disadvantages of superannuation as a vehicle for funding retirement. In particular, by explain the following

(A) What a super fund is and its sole purpose?

(B) The key legislation governing superannuation in Australia its purpose and why they can have confidence in the system.

(D) What key advantages does superannuation offer to Australian's in accumulating wealth and providing an income for retirement?

(E) What key disadvantages does superannuation offer to Australian's in accumulating wealth and providing an income for retirement

(F) Why you would or would not recommend super as their primary retirement savings vehicle?

Maximum 500 words

2. As a part of the advice process what documents are you required to give to Robert and Jillian in their specific circumstances. (Assume you will provide written product advice) What is the purpose of each of these documents and when do they have to be given to the client?What is the obligation on employers with respect to their employees under the Superannuation Guarantee scheme?

3. What type of contributions can the employer and Robert make (both through the employer and personally to superannuation? What is the tax treatment of these types of contributions?

4. What limitations apply to accessing the funds invested in superannuation? ie when can the clients get their money out assuming they are both in good health? What is the earliest age that Robert can access his super?

5. How much tax on income will Robert save if he chooses to salary sacrifice the maximum amount to his superannuation fund vs taking it as income? (ignore the Medicare levy and investment earnings).

6. Robert's employer did not meet the obligations required under the super guarantee scheme for the third quarter of 2018. No super contribution was paid for Robert at all in that quarter. The payment was finally paid 145 days after the start of the relevant quarter. What is the total super guarantee charge (SGC) payable by the employer? What are the tax implications for the employer. Ignore the late payment general interest charge.

Note: All calculations are either to be shown in your answer or placed in an appendix with an appropriate reference in the body of the report.

Reference no: EM132317435

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