PE09A - Semester 1, 2009 Solutions Final Examination...

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1 Semester 1, 2009 Solutions – Final Examination AFF3111 Personal Financial Planning PART A Question 1 (any 5 points x 2 marks = 10 marks) In providing advice to Jiang the following areas should be covered by a financial advisor: whether she is able to save money on a yearly income of $60,000 after tax and living expenses; Ming’s circumstances and the level of income he will be on when he returns to work; the benefits provided in the four funds of which Jiang is a member (this would include a discussion of the types of funds and the benefits they could provide); consideration of transferring the benefits to one particular fund and the costs involved; the amount of contributions she could contribute to the fund considering that she is 35 and self- employed; and a discussion on the types of benefits that can be paid from a superannuation fund, for example a lump sum or pension or a combination of both. Question 2 (10 x 1 mark each = 10 marks) (i) (b) (ii) (a) (iii) (c) (iv) (c) (v) (b) (vi) (a) (vii) (b) (viii) (a) (ix) (a), (d) (x) (b) Question 3 (10 x 1 mark each =10 marks) (i) T under the Corporations Act and FSRA (ii) F may hold but more likely to hold “authorised representative” status (iii) F FSG outlines the services offered and fees charged (iv) T the benefit lies in the tax credit (v) T member is under 65 and does not need to pass a work test (vi) F $35,000 is the correct deduction (vii) T a fund which has been advised by APRA as complying (viii) F Cathy is doing work of a domestic nature (ix) F $55,000, the value increases in $5,000 instalments (x) F assessable income, not taxable income
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2 PART B Question 4 (4 + 6 + 6 + 4= 20 marks) (i) Deeming rates were introduced to simplify the assessment of earnings from financial assets by Centrelink, and to encourage pensioners to earn higher returns on their funds than the deeming rates. Another two marks for a sensible example using the rates. (ii) Asset Return Risk Liquidity Cash Very low to low Very low High Fixed interest Low to medium Low to medium Low Shares High High Medium to High Property Medium to high Medium to high Medium to low (iii) Salary sacrifice loses 15% on contribution, earnings taxed at 15%, capital gain at 10%, contributions capped at $50,000 annually or $100,000 if over 50 up to 30 June 2012, tax on withdrawal depends on age. Contributions from after-tax income
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PE09A - Semester 1, 2009 Solutions Final Examination...

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