Q9A - Problem Set Superannuation Solutions 1 How can elements in superannuation funds be and remain untaxed in the fund Some public

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Problem Set – Superannuation – Solutions 1. How can elements in superannuation funds be and remain ‘untaxed in the fund’? Some public sector (government) superannuation funds were historically “unfunded” (employee retirement benefits funded from government consolidated revenue – there were no actual invested assets backing the superannuation scheme – or not 100% of liabilities backed by assets). So essentially, the accrued retirement benefit is untaxed and tax is therefore payable by the employee on their retirement (either on any lump sum taken or on income payments in retirement). 2. If you were an accountant advising a small business owner thinking of setting up a SMSF for herself and her partner, what personal characteristics and attitudes would you expect to discern in your client? According to ASIC, how much capital should they have to put in the fund? Generally they would display a need for personal control, an interest in investment markets and in managing their own investments, have the knowledge and experience to manage the assets of the fund (or at a minimum the willingness to learn) and an appreciation of the duties and requirements of a being a trustee. Individuals considering a SMSF should have sufficient time to devote to the proper management of the fund. ASIC considers a minimum $200,000 is required to operate an economical SMSF. 3. Wong, aged 50, earns $130,000 as director of programming. He decides to salary sacrifice half his gross salary to superannuation. What is his net saving in tax, disregarding the Medicare and Flood levy? There are two elements to consider – the income tax on reduced (after salary
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This note was uploaded on 12/06/2011 for the course ECON 101 taught by Professor Shen during the Three '11 term at Monash.

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Q9A - Problem Set Superannuation Solutions 1 How can elements in superannuation funds be and remain untaxed in the fund Some public

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