Financial planning case study

Financial planning case study

Introduction

Question no1 A)

Jerry and Jenny

Tax calculation 2013-2014

 

Year ending 2013 Total Year ending 2014 Total Jerry Jenny Jerry Jenny Salary $ 105,000 $ 50,000 $ 155,000 $ 108,675 $ 108,675 Employment Termination Fees $ 10,000 $ 10,000 Rental property $ 10,250 $ 10,250 $ 10,250 $ 10,250 CMB dividend $ 1,900 $ 1,900 $ 1,900 $ 1,900 >>add franking credit (CMB) $ 814 $ 814 $ 814 $ 814 Saving account - Bundoora credit union $ 375 $ 375 $ - $ - Term deposit-Bundoora credit union $ 1,800 $ 1,800 $ 400 $ 400 Assessable income $ 117,425 $ 52,714 $ 170,139 $ 119,325 $ 12,714 $ 132,039 Less allowable deduction

-$ 1,500

-$ 1,000

-$ 2,500 $ 1,553 (0)  $ 1,553 Taxable income $ 115,925 $ 51,714 $ 167,639 $ 117,773 $ 12,714 $ 130,487 Tax rate

37%

33%

 

37%

 

 

 

 

 

 

 

 

 

Gross tax payable $ 30,839 $ 8,354 $ 39,193 $ 31,523 $ - $ 31,523 Less low income tax offset $ -

-$ 224

-$ 224 $ - $ - $ - Less franking credit (CMB) $ -

-$ 814 $ -

-$ 814 $ -

-$ 814 Add Medicare levy $ 1,739 $ 776 $ 2,515 $ 1,767 $ - $ 1,957 Net tax payable $ 32,578 $ 8,092 $ 41,484 $ 33,289 $ - $ 98,559

Question 1)

Jerry and Jenny cash flow statement

For the year ended 2013-2014

 

Year ending June-2013 Year ending June-2014 Jerry Jenny Total Jerry Jenny Total cash inflows Net salary $ 105,000 $ 50,000 $ 155,000 $ 108,675 $ 108,675 Employment Termination Fees $ 10,000 $ 10,000 Rental Property $ 10,250 $ 10,250 $ 10,250 $ 10,250 Dividends >>CMB shares $ 1,900 $ 1,900 $1,900  $ 1,900 Franking credit (30/70) $ 814 $ 814 $ 814 $ 814 Interest income-savings $ 375 $ 375 $ - $ - Term Deposit $ 1,800 $ 1,800 $ 400 $ 400 Total income $ 118,239 $ 51,900 $ 170,139 $ 120,139 $11,900  $ 132,039 Work related deductable

-$ 1,500

-$ 1,000

-$ 2,500

-$ 1,553

 

-$ 1,553 Net income $ 116,739 $ 50,900 $ 167,639 $ 118,586 11,900  $ 130,486 Less tax payable $ 32,578 $ 8,092 $ 40,670 Less Fanking credit $ 814 $ 814 Net cash inflows $ 126,969 $ 129,672 Less cash outflows Mortgage payments

 

 

-$ 38,800

 

 

-$ 38,800 Insurance

 

 

-$ 3,000

 

 

-$ 3,105 Household expense

 

 

-$ 20,800

 

 

-$ 21,528 Private education

 

 

-$ 20,000

 

 

-$ 20,700 Utilities expense

 

 

-$ 4,300

 

 

-$ 4,451 Entertainment expense

 

 

-$ 8,000

 

 

-$ 5,000 Travel and Holiday

 

 

-$ 7,000

 

 

-$ 5,000 Motor Vehicle expense

 

 

-$ 8,500

 

 

-$ 8,798 Sundries

 

 

-$ 2,000

 

 

-$ 2,070 Renovations cost

 

 

 

 

 

-$ 35,000 Total cash outflows

 

 

-$ 112,400

 

 

-$ 144,452 net flow $ 14,569

 

 

-$ 14,780

Jerry and Jenny Budgeted cash flow statement

For the year 2013/2014

Item

2013/2014

 

 

 

Jerry

Jenny

Total

Cash inflows

 

 

 

Salary ( increase 3.5%)

108,675

0

108,675

Termination payment

 

10,000

10,000

Rental income

10,250

 

10,250

Dividend

 

1,900

1,900

Franking credit(30/70)

 

814

814

Interest income-saving

0

 

0

Interest income-term deposit (45,000-35,000)x4%

400

 

400

Total assessable income

119,325

12,714

132,039

 

 

 

 

Less deductions

 

 

 

Work-related expense (increase 3.5%)

-1552.5

0

 

Taxable income

117,773

12,714

130,487

 

 

 

 

Gross tax payable

31,523

0

31,523

Less low income tax offset

0

0

0

less franking credit

 

-814

-814

add Medicare levy ...