Case study 1 — Nathan and Mary Davidson
You are a financial planner for AFS licensee EANWB Financial Planning. Nathan and Mary Davidson have been doing their own research into their retirement planning and recently attended one of your firm’s retirement seminars. Following this seminar they spoke with you about their concerns that they may not accumulate enough money in superannuation to fund their retirement.
You meet with them and during your initial meeting you provided them with some basic information including a fact finder for them to fill out and then organised a second meeting in which you collected more information on their current financial situation and spent time clarifying their needs and objectives. A summary of their financial situation and the fact finder and risk profile is shown below.
Question 1
Nathan and Mary are confused concerning the tax deductibility of superannuation contributions. They ask:
‘Are we correct in assuming that we can both claim personal tax deductions for any superannuation contributions we make?’ Could you explain the tax deduction rules
that apply to our situations?’
Question 2
Nathan asks:
‘As Mary’s income from employment is $5600, what do I need to do to claim the spouse contributions tax offset?’
Question 3
Mary comments that as Nathan is the main salary earner they should consider using Nathan’s income to make contributions and asks:
‘How does Nathan make tax-effective contributions to superannuation from his income if he cannot claim the contributions as a tax deduction?’
Question 4
Mary asks:
‘We read an article recently that said Nathan can split the superannuation contributions he makes to my superannuation account. Is that correct and how does it work?’
Question 5
Nathan is concerned about tax payable if they invest the balance of the inheritance money into superannuation. He says:
‘I’ve heard that some people have had to pay tax at the highest tax rates on superannuation contributions. Can we be sure we won’t fall into that trap?’
Question 6
Nathan asks:
‘What would be the outcome and any tax consequences for me if I salary sacrifice an amount equivalent to our excess income?’

Read less