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FINAL EXAMINATION
Unit: TPLA601 Financial planning & advice
Date: 20 October 2021
Time Allowed: 3 hours plus 10 minutes reading time
Total Number Seven (7) questions
of Questions:
Total Marks: 100 marks

Instructions:
1. Students are advised to read the exam paper carefully before
commencing to answer questions.
2. Type your name and student ID in the top section provided above.
3. You may commence answering questions at any time.
4. You have 10 minutes after the conclusion of the exam period to upload
your completed answer document through Turnitin on Moodle. Answers
received after the 10-minute upload period will not be accepted.
5. Type your answers into this document using MS Word.
6. All answers must be submitted in English.
7. This is an open-book and open-web exam. You may use any available
resource in answering questions.
8. All rates are based on 2021/22 financial year, unless specified
otherwise. The relevant rates you should use are contained at the end of this
exam paper.

This paper consists of 12 pages

Question 1 – Tax payable

Total marks – 10

Calculate the tax payable if an individual taxpayer has the following amounts of taxable
income. Include Medicare Levy and Medicare Levy surcharge, where applicable.
a. $17,000 – Non-resident (not a working holiday maker). (2½ marks)
b. $95,000 – Non-resident, (not a working holiday maker. (2½ marks)
c. $100,000 – Resident, with no private health insurance. (2½ marks)
d. $245,000 - Resident; with private health insurance. (2½ marks)

Show your workings. Full marks will not be awarded if workings are not provided.

Start typing your answer here….

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Question 2 - Calculating income tax payable
Total marks – 20
Calculate Elizabeth and Kane’s total tax liability (including Medicare).
Their financial situation is as follows:
 Elizabeth’s salary is $170,000 p.a. In addition to this, her employer pays the
superannuation guarantee contribution on her behalf.
 Kane earns $90,000 salary as well as a taxable allowance of $30,000. His employer pays
superannuation guarantee on his salary (but not the taxable allowance). Kane salary
sacrifices an additional $12,000 to superannuation.
 Kane and Elizabeth both earn rent from a jointly owned investment property of $20,000
p.a. (combined) and have an interest only loan of $150,000 (combined) on this property at
an interest rate of 5% p.a.
 Elizabeth owns an Australian share portfolio valued at $50,000, paying 4% dividends,
which is 70% franked.
 Kane owns a cash management account valued at $50,000 paying 5% interest.
 Kane has income protection insurance owned personally (non-superannuation) with an
annual premium of $3,000 owned and paid by him personally.
 Kane has a gross, nominal capital gain of $7,000 from the sale of shares owned for 2
years (this is before any CGT discount).
 Elizabeth donated $2,000 to a charity, which is a tax-deductible gift.
 Elizabeth and Kane have private hospital insurance cover in place.

Calculate the tax payable for each of Elizabeth and Kane. Your response should include
calculations to show:

 Assessable income
 Deductions
 Taxable income
 Income tax payable
 Medicare levy
 Tax offsets
 Final income tax payable

Round all figures to the nearest whole dollar.

Use the following table as a guide. You may need to add rows to complete your answer.
Show your workings. Full marks will not be awarded if workings are not provided.

Kane – Type answers in Elizabeth - Type answers in

this column this column
Income

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Salary
Allowance
Other income
Dividends
Imputation credits
Capital gain
Less Exempt Income
Assessable Income
Less: Deductions
Work related expenses
Disallowed deductions
Taxable Income
Income tax payable
Less Tax Offsets
Imputation credit
Income Tax Payable
Plus: Medicare Levy
Plus: Medicare Levy
Surcharge
Total Income Tax Payable

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Question 3 - Concessional and non-concessional superannuation contributions
Total marks – 15
a. Keith is age 35 and earns $110,000 p.a. His employer contributes 12% of this salary
to his nominated superannuation fund each year (this includes the employer’s
mandatory superannuation guarantee contributions). Keith would like to salary
sacrifice additional contributions into superannuation.
i. Describe, in your own words how salary sacrifice to superannuation works,
including from a cashflow and taxation perspective? (4 marks)
ii. What is the maximum amount that Keith can salary sacrifice to
superannuation to stay within the concessional contribution limit? Show your
workings (4 marks)

b. Sonia contributed $110,000 to superannuation as a non-concessional contribution in

2021/22.

iii. Outline the non-concessional contribution bring forward rules in your own
words (3 marks)
iv. Determine whether Sonia can contribute a further $150,000 in 2021/22.
Explain your answer, including any taxation consequences. (4 marks)

Show your workings. Full marks will not be awarded if workings are not provided.

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Question 4 - Superannuation contributions
Total marks – 15
Margaret, who is 67 years old, is employed by Exotic Cars Limited to show clients around
the manufacturing plant. An accident at work has meant she has had to reduce her working
hours to 10 hours per week. Her income for the year will be about $30,000.
Provide Margaret with advice on:
a. The level of superannuation contributions her employer is legally required to
contribute on her behalf? (3 marks)
b. Specific types and amounts of additional superannuation contributions Margaret can
make to superannuation? (6 marks)
c. What specific taxation and Government incentives/ concessions are available on the
above superannuation contributions? (6 marks)
Show your workings. Full marks will not be awarded if workings are not provided.

Start typing your answer here….

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Question 5 - Estate planning- dying intestate
Total marks - 15
Shaun and Dimity are in their mid-fifties and have three children from their marriage:
Matthew, aged 23; David, aged 17; and Isobel, aged 15. Shaun has been married before and
has one child from that marriage — Annabel, aged 26. Annabel has no contact with her father
and blames him for the financial hardships that her mother has experienced since their
divorce.
Shaun is employed as an architect while Dimity is a fashion consultant. The couple’s assets,
at current market value, consist of the following:

Asset $

Home and contents 1 050 000

Bank account 30 000

Shares 130 000

Holiday home 680 000

Managed funds 40 000

Life insurance policy 800 000

Self-managed superannuation fund — total (Shaun and Dimity — 50/50) 550 000

Superannuation account — Dimity 60 000

The couple raises the following issues.

 All of the couple’s assets are jointly owned between Shaun and Dimity.
 The couple gave Annabel $180 000 to establish a business 3 years ago on the basis
that she has no further claim on Shaun’s estate. However, the couple is convinced that
Annabel will nevertheless contest Shaun’s will upon his death.
 Shaun's life insurance policy is owned by Dimity.
 Dimity’s individual superannuation fund contains a $150 000 life and TPD policy and
Dimity has decided to retain this account in order to preserve the insurance policy.
Dimity completed a binding death benefit nomination 4 years ago nominating 100%
to be paid to Shaun in the event of her death. Both Shaun and Dimity have completed
binding death benefit nominations within their SMSF.
 The couple each has a will in place leaving everything to each other. They have each
nominated their son David as executor of their respective estates. Shaun and Dimity
have appointed each other as their respective general power of attorney.
 Dimity's mother, aged 90, owns an apartment in Queensland. However, the mother is
in an aged care facility and in bad health and is no longer living in the apartment. The
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 mother is looking to leave the property to Dimity. The property cost $130 000 in 1989
and has a current market value of $510,000.
 The couple’s son, David, has been married for the past 3 years but he and his spouse
have experienced marriage problems for some time. Shaun and Dimity would like to
gift David $80 000 to use as a deposit on a house but, given the marriage problems, do
not want the money to be lost in a divorce.
 The couple would like the family assets distributed in a tax-effective manner upon
their death.

Shaun and Dimity are looking to review their wills and seek some advice from you on how
best to structure their estate-planning needs. You are required to analyse the couple’s
situation and detail relevant issues and recommend advice that the couple should consider.
(15 marks)

Start typing your answer here….

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Question 6 - Estate planning- dying intestate
Total marks - 10
Paul, a single dad with three children aged 21, 11 and 9 died recently. His late wife, Winifred
died giving birth to their third child.
Paul did not have a will. His estate comprises the following assets:
 Family home: $330,000
 Superannuation: $115,000
 Cash: $15,000
 Family car: $20,000
 Art work: $8,000

a. Describe some of the issues associated with Paul’s intestacy. (6 marks)

b. Outline some of the estate planning strategies that Paul could have considered if he
had prepared a will. (6 marks)
c. What are the advantages of having a valid will in place? (3 marks)

Start typing your answer here….

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Question 7 – Term life insurance premiums
Total marks – 15
ABC Insurance offer term life insurance under the following terms:

 Guaranteed renewal
 Cover to age 75
 Sum insured remains constant

The indicative monthly premiums for $1 million coverage are as follows:

Age 21 to 34 35 to 39 40 to 44 45 to 49 50 to 54

Non-smoker $101 $112 $148 $223 $387

Smoker $161 $225 $285 $485 $808

a. Why do the premiums increase as the age of the insured increases? (3 marks)
b. In percentage terms, approximately how much more expensive is term life insurance
for a smoker than a non-smoker? (2 marks)
c. If the renewal of the policy was at the discretion of the insurer, would you expect the
premiums to be higher or lower? Why? (3 marks)
d. If the sum insured was indexed to CPI, would you expect the premiums to be higher
or lower? Why? (2 marks)
e. If the term of the insurance was to age 65 rather than age 75, would you expect the
premiums to be higher or lower? Why? (2 marks)
f. Andrea and her husband are both 45, non-smokers and considering term life
insurance. Ashleigh believes she is being discriminated against by being asked to pay
the same premium as her husband. Why does she hold this view? Do you agree? (3
marks)

Start typing your answer here….

END OF THE EXAMINATION

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Exam Resources
Sourced from www.ato.gov.au

Resident individuals – income tax rates 2021-22

Taxable income Tax on this income

0 - $18,200 Nil

$18,201 – $45,000 19c for each $1 over $18,200

$45,001 – $120,000 $5,092 plus 32.5c for each $1 over $45,000

$120,001 – $180,000 $29,467 plus 37c for each $1 over $120,000

$180,001 and over $51,667 plus 45c for each $1 over $180,000

The above rates do not include Medicare levy

Other non-resident individuals – income tax rates 2021-22

Taxable income Tax on this income

$0 - $120,000 32.5c for each $1

$120,001 – $180,000 $39,000 plus 37c for each $1 over $120,000

$180,001 and over $61,200 plus 45c for each $1 over $180,000

Taxation of resident minors – income tax rates 2021-22

Income sources Income threshold Tax payable (excludes Medicare levy)

$0 - $416 Nil

$417 - $1,307 66% of excess over $416

$>1308 45% of entire unearned income

Income from a business, employment or deceased estate Normal adult marginal rates

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Medicare levy thresholds - 2020-21
The full Medicare levy is 2.0% of taxable income. A reduced Medicare levy applies where taxable income is
below the thresholds in the table below.

The following table does not apply if the taxpayer is eligible for Senior and Pension Tax offset (SAPTO),

Single taxable income Family taxable income Medicare levy

$0 - $23,226 $0 - $39,167* Nil

$23,227 - $29,032 $39,168* - $48,958** 10% of taxable income between

thresholds

$29,033+ $48,0959**+ 2%

*For each dependent child or student, add $3,597

**For each dependent child or student, add $4,496

Medicare levy surcharge (MLS) - 2020-21

Individuals and families on incomes above the MLS thresholds are liable to pay the MLS for any period
during that they, or their dependents, did not have private patient hospital cover. If you have to pay the MLS, it
is in addition to the Medicare Levy.

Single income for surcharge Family income** for surcharge Medicare levy surcharge rate
purposes* purposes*

<$90,000 <$180,000 0%

$90,000 - $105,000 $180,000 - $210,000 1%

$105,001 - $140,000 $210,001 - $280,000 1.25%

>=$140,000 >=$280,001 1.5%

*Includes taxable income, reportable fringe benefits, total net investment losses, reportable employer super
contributions, exempt foreign employment income (and certain trust income).
**If there is more than one dependent child, these thresholds are increased by $1,500 for each child after the
first.

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