# For Adviser Use Only Mlc Facts And Figures 2015 16 Contents Tax1 14 Super15 38 I

1)Mr Jones is employed as an accountant with XYZ Accountants. He earned \$120,000 gross and paid \$30,000 in tax. He received \$158 in interest on his bank account. He spent \$300 on a work calculator and some pens.

Calculate the tax liability (refund) including all medicare costs for Mr Jones.

2)Mrs Smith, 59, is a self-employed cabinet maker. Her net business income was \$50,000. She wants to contribute money to superannuation to obtain a tax deduction. She is comfortable contributing all of her income if necessary.

Calculate her personal income tax liability Pre the contribution (including all medicare costs):

What level of contribution would you recommend?

Why do you recommend that level?

Calculate her personal income tax liability POST the contribution (including all medicare costs):

3)Mr and Mrs Axel (both 70) live in their own home. They have the following assets:

Cash in bank                       \$150,000

Home contents                 \$10,000

Motor Vehicles                 \$25,000

Caravan                                \$15,000

Shares                                  \$220,000

Calculate their Centrelink Entitlement (both income and asset tests):

4)Use Excel to solve these questions:

Mr Jones earns \$80,000 per annum. He has a \$300,000 personal mortgage with repayments of \$32,000 per annum. The interest rate is 5% per annum (so the interest component is \$15,000).

• a)How many years will it take to pay off the loan?

Mr Jones has the opportunity to invest into an Australian Unit Trust that will pay 7% interest per annum, with no capital gains. Mr Jones has been advised to make interest only payments on his personal mortgage and invest the balance of what he is repaying now (\$17,000) into this Unit Trust investment.

• b)Using a graph, show Mr Jones which option is best over a 20 year period.
• c)What rate of return would the investment need to generate for the two options to be equal?

If it is required, assume that the tax rate is a flat 30%.