FP5eQCh18 - Problems with Guided Answers by Sharon Taylor...

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Financial Planning in Australia 5e Problems Ch18 Page 1 Problems with Guided Answers by Sharon Taylor © 2013 Reed International Books Australia Pty Limited trading as LexisNexis. Permission to download and make copies for classroom use is granted. Reproducing or distributing any material from this website for any other purpose requires written permission from the Publisher. Chapter 18: Social Security 1 Louise plans to retire next month when she is 65 years of age. She provides you with the following details: single; homeowner; motor vehicle, household contents and other lifestyle assets have a market value of $200,000; cash management trust $50,000; bank savings account $10,000; fixed deposits $100,000; and share portfolio $50,000. Determine Louise’s Age Pension entitlement when she becomes eligible to receive it. Is she assets tested or income tested? Assessable assets: Under the Assets Test motor vehicle, household contents and other lifestyle assets have a market value of $200,000; cash management trust $50,000; • bank savings account $10,000 fixed deposits $100,000; and share portfolio $50,000. Total = $410,000 $755.50 – 1.50 / 1,000 (410,000 – 186,750) $755.50 – 334.88 = $420.62 Financial assets = $210,000 Under the Income Test Deeming: 3.0% × 44,600 + 4.5% × (210,000 – 44600) = 1,338 + 7,443 = $8,781 per annum or $337.73 per fortnight $755.50 – .50 (337.73 – 150) = $661.64 Hence, pension payable to Louise will be based on Assets test = $420.62.
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