Alex and Fiona Wilson Case Study - Alex Case Study - Taxation Case Study and Presentation Assignment Help

Taxation Case Study and Presentation Assignment Help

Assignment Task:

Prepare a written submission of approximately 2,500 words in length, professionally presented, evaluating retirement benefits from a taxation point of view.

Part 1 

Alex and Fiona Wilson have approached you to seek your advice concerning their retirement planning and succession planning with a view to optimizing their retirement income stream and the best way of passing on their assets to their children Edward and Tanya. Prepare a file note justifying your recommendations. This will be kept internal in your firm, so ensure that you consider alternatives, justify your advice based on retaining the ownership of the property and that Wilson needs to provide for increased cost of living in the future.

You may assume that this record will be read-only by parties (lawyers/accountants) who are familiar with taxation law, so you may (and are required to) use legal terms where appropriate to convey meaning. Please note as this is a university assessment task you need to use references. The scenario to be addressed is given below.

Part 2 

Prepare a 5-minute presentation of your recommended strategy to the clients. You may use no more than 5 powerpoint slides to support your presentation.

 All submissions must comply with the requirements listed in the Student Handbook for this course.

Scenario to be addressed

Alex is 63 and Fiona is 60, their children are Edward 31, Tanya 24. Alex and Fiona live and own a grocery store, which is situated on a 10 Acre plot near Heddon Greta. They have been carrying on the business since the acquisition of the property. They also own their family home inherited from Alex’s parents in 1998. The local real estate agent has provided a market valuation for the grocery store at $1,000,000 and the home on a 2-acre land at $300,000. Alex and Fiona are considering retiring in the near future and interested in passing on their properties to their children.

Alex and Fiona are currently running the grocery store as a partnership and the partnership profits available for distribution are $80,000 after paying all expenses and $25,000 each super contribution.

for Alex and Fiona. There is no rent accounted for as Alex and Fiona jointly own the grocery store property. They acquired the property in 1989 soon after Edward was born.

Recently there are new home developments in Heddon Gretta and a nearby suburb Cliftleigh and there is a growing demand for properties like that of Wilson’s grocery store.

As a result, Alex Wilson believes it is a great opportunity for the couple to retire after so many years of hard work and device a way that the 2 properties could be passed on to children.

The options in Wilsons’ mind are:

1. They have an offer from a leading supermarket to buy the property at a premium for $1,500,000. This is a confidential offer and not to be discussed with anyone else in the area. However they a free to seek your advice as a qualified financial planner. As retirees, the bank is offering them a 5.5% interest on deposits over a million dollars.

2. Lease to the supermarket for $80,000 per annum with a fixed rent increase of 3% every 3rd year and a market review every 12th years. They are seeking a contract for 25 years.

3. Their son Edward is currently working in the retail industry and is keen to take over the store and develop to cater for the anticipated population growth in the area. However, is only able to offer a lease at $70,000 per annum.

4. Wilsons have an SMSF (Wilson Family Super) balance of 650,000. It is expected that the transfer of property to Superfund would cost $50,000 to the fund. The shortfall between market value and the funds available could be treated sorted by Wilsons making a non-concessional contribution to the SMSF.

Further information to consider:

1. The maintenance cost of the Property is $10,000 per annum which the owner of the building has to bear.

2. If Wilsons accept the offer from their son, their partnership income would be $50,000 (split 50/50) after allowing $10,000 for maintenance and they would be eligible for an age pension of $7,500 each

3. If they choose to transfer the property to SMSF and draw a pension of 50,000 p.a. they will be qualified for an age pension of $12,500 each.

4. Ignore Item 4 completely

5. Consider Medicare Levy, Low Income Tax Offset (LITO) and Seniors and Pensioner Tax Offset (SAPTO) in your calculation

6. Ignore the new Low and Middle Income Tax Offset (LAMITO) in this instance.

7. If Wilsons decide to retire now and dispose of the property later (either to an outsider or to their SMSF they would lose the 15-year CGT Exemption available to SBE’s). However, they will retain the Main residence exemption on their home as it has been and will be their main residence always.

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