Assessment 3 Information Subject Code: ACC304 Subject Name: Taxation Law Assessment Title: Case Studies Assessment Type: Statement of Advice Weighting: 30 % Total Marks: 40 marks Submission: Via Turnitin on MyKBS Your Task Your task is to analyse client information outlined in the three different case studies below and present the findings in three Statement of Advice (approximately 1,500 words). 1) You are required to prepare Lucy’s individual taxation return. 2) You are required to provide recommendations and tax calculations to Susan regarding the taxation implications and tax payable by the trustee for Megan and Isabel, the beneficiaries. 3) You are required to calculate the franking account and tax payable by Otago Pty Ltd. For each question you are expected to: 1) identify the facts and issues for each case 2) apply the relevant legislation and/or case law. Learning Objectives After completing this Individual Assignment, you will be able to: 1) Research information about each question using tax cases and tax legislation. 2) Identify the main issues and make recommendations for each case. 3) Calculate taxes for an individual, a trust and a company. Assessment Instructions Statement of Advice 1 – Prepare a tax return for an individual taxpayer (10 marks for technical and calculation accuracy and relevance and 10 marks for writing style; refer to marking rubric for more guidance) Your client Lucy has attended your office to have her 2021-year tax return prepared. Lucy is 52 years old, single resident taxpayer employed by Burwood Council as a clerk. Lucy is also a friend of yours. She has the following documentation and admits that she is not good at keeping her receipts and invoices: Payment Summary for the period 1 July 2020 to 30 June 2021 from Burwood Council. Gross Wages $56,000 Allowances – Clothing $400 Tax withholding Deducted $12,000 Various receipts Date Paid to Details Amount ($) 30 July 2020 Eastern Clothing Non-compulsory uniform (registered design of Council) $380 1 September 2020 Foodbank Australia Donation $50 1 October 2020 Tax agent 2019 tax return fees $100 1 December 2020 Lim’s Computer Computer (est. 50% work use with 3 years effective life) $1,200 1 February 2021 Corp Bookshop Textbooks for clerical course $500 Other Information 1) Lucy estimated total $490 annual train ticket used to travel to and from work. 2) Lucy advises you she spent $600 on personal grooming which was essential for her job and insists that she claims this amount. 3) Lucy held $2,000 for the whole year in an interest-bearing account but insists that she did not receive any interest during the year. Lucy has not supplied any bank statements. 4) Lucy sold various shares on 20 June 2021 as follows. • Apricot Shares (Australian company): purchased in January 1998 for $20,000 and sold for $55,000. • Pear shares (Italian company): purchased in March 2019 for $7,000 and sold for $5,000. • Cherry shares (Australian company): purchased in May 2021 for $9,000 and sold for $14,000. Required 1) Calculate taxable income for Lucy. As the Tax Agent, what advice would you provide for the best outcomes in relation to depreciation, CGT method and general deductions for Lucy within Australian income tax law? You are required to explain all income & deduction details with section numbers and/or cases in your explanations. 2) Advise Lucy on the CGT consequences of the share sales. You must provide all methods available for her and choose the best method to minimise Lucy’s net capital gains. 3) As the Tax Agent, how would you handle the stance your client has taken in points 2 and 3, Point 2: Lucy advises you she spent $600 on personal grooming which was essential for her job and insists that she claims this amount. Point 3: Lucy held $2,000 for the whole year in an interest-bearing account but insists that she did not receive any interest during the year. Lucy has not supplied any bank statements. You should refer to the Code of Conduct from Tax Practitioners Board. What is the principle involved? What do you recommend in each point? Statement of Advice 2 – Advice on Trust income and distributions (10 marks for technical and calculation accuracy and relevance) Your client Susan has attended your office to have her 2021-year tax return prepared. Susan is the trustee of an Australian resident trust estate created by a Trust Deed. She created the trust for the benefit of her daughters, Megan aged 19 years and Isabel aged 15 years. They are both residents of Australia. The following information indicates the trading activities of the trust for the 2020/21 income tax year. Receipts Net income from trading activities $80,000 Fully franked dividend received $25,000 Proceeds from shares in Hub Ltd on 12 June 2021 $60,000 (the shares were purchased in 2005 at a cost of $20,000) Rental income $65,000 Expenses Expenses incurred in generating rental income $55,000 Other information Megan derived a salary of $17,000 while working casually at McDonalds. Isabel received interest income of $2,000 from her savings account (savings account was established two years ago from $40,000 deposited from her grandfather as a gift). Isabel also received a salary of $9,000 working at Hungry Jacks during school holidays. Required Advise Susan the taxation implications (tax payable by the trustee and/or each beneficiary) under each of the alternatives (1) and (2) below. 1) Susan does not exercise any discretion as to the distribution of income during the year. 2) Susan distributes the trust net income to each beneficiary at 50% each. Statement of Advice 3 – Calculate the franking account and tax payable by Otago Pty Ltd. (10 marks for technical and calculation accuracy; refer to marking rubric for more guidance) Frank is a director of Otago Pty Ltd (Otago), an Australian resident private company, with a corporate tax rate for imputation purposes for the 2020/21 income year of 30%. Frank provided you with the following information regarding the company’s franking account: 1 July 2020: Opening balance $500 credit. 29 July 2020: Paid 2020 tax year fully franked final dividend $7,000 28 February 2021: Paid 2021 tax year 60% franked interim dividend $9,000 30 April 2021: Received fully franked dividend from Australian company $4,500 28 June 2021: PAYG instalment paid relating 2020/21 tax year totalled $1,200 30 June 2021: Declared a fully franked dividend of $10,000 Otago had a taxable income of $16,000 for 2020/21. Required 1) Prepare Otago Pty Ltd’s franking account for the 2020/21 tax year and explain any consequences arising from the franking account balance at 30 June 2021. 2) Calculate net tax payable (refundable) for the company.
Important Study Information Academic Integrity Policy KBS values academic integrity. All students must understand the meaning and consequences of cheating, plagiarism and other academic offences under the Academic Integrity and Conduct Policy. • What is academic integrity and misconduct? • What are the penalties for academic misconduct? • What are the late penalties? • How can I appeal my grade? Click here for answers to these questions: http://www.kbs.edu.au/current-students/student-policies/. Study Assistance Students may seek study assistance from their local Academic Learning Advisor or refer to the resources on the MyKBS Academic Success Centre page. Click here for this information. ACC304 Taxation Law Assessment 3 Marking Rubric /40 marks Statement of Advice 1 (10 marks) 0 – 5 6 – 10 Achieved marks ( /10) Has demonstrated limited achievement: Correctly calculated some taxable income and allowable deductions items. Stated some outcomes in relation to depreciation, capital gains tax methods and general deductions. Struggled to articulate the correct capital gains tax consequences of the sale of shares. Failed to address the tax practitioners code of conduct and principles involved. Has achieved all or most of: Correctly calculated the taxable income and allowable deductions. Stated the best outcomes in relation to depreciation, capital gains tax methods and general deductions. Articulated the correct capital gains tax consequences of the share sales. Addressed the tax practitioners code of conduct and principles involved. Statement of Advice 2 (10 marks) 0 – 5 6 – 10 Achieved marks ( /10) Has demonstrated limited achievement: Failed to correctly address the taxation implications of Susan not distributing trustee income for 2020/21. Failed to correctly address the taxation implications of Susan distributing trust net income to each beneficiary at 50% each during 2020/21. Has achieved all or most of: Correctly addressed the taxation implications of Susan not distributing trustee income for 2020/21. Correctly addressed the taxation implications of Susan distributing trust net income to each beneficiary at 50% each during 2020/21. Statement of Advice 3 (10 marks) 0 – 5 6 – 10 Achieved marks ( /10) Has demonstrated limited achievement: Either did not prepare or only partially prepared Otago Pty Ltd franking account for 2020/21. Failed to identify any consequences arising from Otago Pty Ltd franking account balance as at 30th June 2021. Either did not correctly calculate or only partially calculated correctly Otago Pty Ltd net tax payable for 2020/21. Has achieved all or most of: Correctly prepared Otago Pty Ltd franking account for 2020/21. Correctly identified consequences arising from Otago Pty Ltd franking account balance as at 30th June 2021. Correctly calculated Otago Pty Ltd net tax payable for 2020/21. All Statements of Advice Writing Style (10 marks overall) 0 – 5 6 – 10 Achieved marks ( /10) Has demonstrated limited achievement: Some sentences contain grammatical errors and typos, there are noticeable inconsistencies in the formatting, and the syntax makes some of the answers difficult to follow. Has achieved all or most of: The document does not contain any grammatical errors or typos, the formatting is consistent, and the syntax is articulate and legible
The Assignment (student to complete) Section 1: Establish the relationship with the client and identify their objectives, needs and financial situation Section 1 Part A — Establish relationship Apart from the initial contact with the Rosenbergs at your retirement seminar, you have met with them twice in order to gather the information you need to assess their situation and provide them with advice. Briefly explain at least five (5) strategies you are likely to use with a client in order to ensure that they are comfortable with you and the interview process. (200 words) Answer here Assessor feedback: Resubmission required? No Section 1 Part B — Adviser obligations Referring directly to yourself and your licensee, explain what an FSG is and why it is necessary. Provide details of the law you must comply with and the information the FSG must contain, including your complaints procedure. (250 words) Answer here Assessor feedback: Resubmission required? No Section 1 Part C — Tax and cash flow Using the information you have gathered from your clients (i.e. the information provided in the case study and fact finder), complete the table below and determine their cash flow position and annual savings capacity. You can assume that the clients have no tax deductions or liabilities other than those stated in the case study or fact finder. Section 1 Table 2 Tax calculation Freddie Sara Combined Comments Income from employment Salary or income from employment Salary sacrifice Salary after salary sacrifice Rental income Unfranked dividends Franked dividends Franking (imputation) credits Interest Other income (e.g. taxable benefits, trust income, investment income) Capital gains 1 yr Capital gains 1 yr Tax-free component of capital gains Assessable income Deductible expenses Donations Income protection insurance Business overheads insurance Other Taxable income Tax on taxable income Non-refundable tax offsets (e.g. LITO/SAPTO/LMITO) Medicare levy Medicare levy surcharge Franking rebate Refundable rebates and offsets Total tax Cash flow Freddie Sara Combined Comment Salary less any salary sacrificed amount Total expenses Total income received before tax less total expenses Total tax payable from tax table above Total net cash flow Assessor feedback: [insert feedback] Date assessed: Click here to enter a date Does the student need to resubmit? No Questions that need to be resubmitted First submission Not yet demonstrated Resubmission Not applicable To pass this subject, you will need to be assessed as DEMONSTRATED for either your first submission or your resubmission. Section 2: Analyse client objectives, needs, financial situation and risk profile to develop appropriate strategies and solutions Section 2 Part A — Gaps in information Identify any gaps in your data collection based on the fact finder in Appendix 1 and the summary of information provided. From the interviews, are there any other issues that would need to be followed up with Freddie and Sara? (100 words) Answer here Assessor feedback: Resubmission required? No Section 2 Part B — Risk profile Identify the Rosenbergs’ likely risk profile based on the information they have provided. Identify any concerns that you may have with their responses compared with the information in the case study. • Suggest questions you could use to clarify the responses. • Justify why you do or do not think that the score and the resulting risk profile category is an accurate reflection of their tolerance to risk, and decide on a profile for each. (250 words) Answer here Assessor feedback: Resubmission required? No Section 2 Part C — Strategies Summarise appropriate retirement strategies for Freddie and Sara. • Consider superannuation and non-superannuation assets and strategies. • Provide a detailed explanation of why you consider these assets and strategies to be appropriate. • Include the lump sum amount that Freddie and Sara will need at retirement to achieve their income goal, and strategies to help them reach that goal. • Provide a summary of other recommendations that you will include in your SOA for Freddie and Sara. (500 words) Answer here Assessor feedback: Resubmission required? No Assessor feedback: [insert feedback] Date assessed: Click here to enter a date Does the student need to resubmit? No Questions that need to be resubmitted First submission Not yet demonstrated Resubmission Not applicable To pass this subject, you will need to be assessed as DEMONSTRATED for either your first submission or your resubmission. Section 3: Address clients’ questions and concerns about superannuation matters Section 3 Part A — Product research Freddie and Sara have stated they are happy with their current superannuation funds. Provide a summary of the type of research you would conduct to ensure the suitability of these funds for the clients’ future retirement needs. (250 words) Answer here Assessor feedback: Resubmission required? No Section 3 Part B — Client queries on superannuation contributions Freddie and Sara have a number of questions about superannuation contributions after the seminar they attended and as a result of their research. Respond to their questions, basing your answer on their personal situation. You may be required to re-educate the clients where they are confused or misunderstand the superannuation rules. Question 1 Freddie is confused about taxation of superannuation contributions. He has friends who write a cheque, send it to their superannuation fund and claim a tax deduction. He asks: Am I 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, how much can we contribute and when we can start? Answer Freddie’s questions. (250 words) Answer here Assessor feedback: Resubmission required? No Question 2 Sara asks: We read an article recently that said Freddie can split the superannuation contributions he makes to my superannuation account. Is that correct, and if so, how does it work? Answer Sara’s question. (150 words) Answer here Assessor feedback: Resubmission required? No Question 3 Freddie is concerned about tax payable if they invest any of their cash savings into superannuation. He says: I’ve heard that some people have had to pay tax on superannuation contributions at the highest tax rates. How can we be sure we won’t fall into that trap? Answer Freddie’s question. (150 words) Answer here Assessor feedback: Resubmission required? No Section 3 Part C — Client queries on superannuation benefit payments Question 1 Sara asks: When and how can we access our superannuation? Can we get it if we are still working? Explain the rule that applies in their circumstances. Explain when and under what circumstances they will be able to access their superannuation. Assume Sara (53) was born in April 1967 and Freddie (55) was born in May1965. (200 words) Answer here Assessor feedback: Resubmission required? No Question 2 Freddie asks: I understand this may not apply to us, but my older brother is 58 and he told me he pays a bit of tax now when he takes money out of super, but when he turns 60, it will be almost nothing. Why is that? Discuss the situation if the lump sum was taken at retirement after age 60 and just before age 60. Include a brief explanation of components of a lump sum, how they are taxed and any other matters relating to them? (200 words) Answer here Assessor feedback: Resubmission required? No Question 3 Sara asks: Tell us more about these income stream options we would have in retirement. How do they work? When can we start one? What are the rules that apply and how much tax do we pay? Discuss this in broad terms and explain the situation immediately before and after reaching age 60. Assume Sara and Freddie will continue to work until age 65 and then retire. (300 words) Answer here Assessor feedback: Resubmission required? No Assessor feedback: [insert feedback] Date assessed: Click here to enter a date Does the student need to resubmit? No Questions that need to be resubmitted First submission Not yet demonstrated Resubmission Not applicable To pass this subject, you will need to be assessed as DEMONSTRATED for either your first submission or your resubmission. Section 4: Present appropriate strategies and solutions to the client and negotiate a financial plan, policy or transaction. Provide ongoing service where requested by the client You must now prepare an SOA based on the recommendations made, which will be used to record this advice (including amendments, if any) for Freddie and Sara. Remember that the SOA must be of a standard that is compliant and would be suitable to present to a client. Important instructions • What to submit: You have been provided with cash flow templates to use for the assignment SOA. Please include them with your submission. • Template SOAs and SOA preparation software: Do not use the sample SOA published by ASIC as a basis for your submission. The use of financial planning software and dealer templates to prepare your SOA is also not permitted. Submissions that exhibit excessive reliance on SOA templates may be considered to be plagiarism or collaboration, and may not be considered to be a reasonable attempt at the assignment. • Assumptions: You must list the assumptions used in your SOA in your assignment submission. These will generally include: – any assumptions you have made regarding missing background information on the clients – any assumptions you have used to calculate future income from your recommended investments – any assumptions used for fees and premiums relating to the products you have recommended. • Strategy advice: You must provide specific strategy recommendations in the following areas based on the information given: – wealth creation strategies to meet retirement needs – personal investments – strategies using superannuation – asset allocation. Use the information on each of these areas given in the subject notes to provide reasons for each of the strategies recommended. • Product advice: Specific product recommendations are not required; however, you do need to make and justify any recommendations of the type of product(s) selected for the client’s consideration. You have been told the clients are happy with their current superannuation funds and do not require any specific advice on their current personal insurance arrangements. However, it is expected that you will provide in the ‘Things to consider section’ of the SOA, appropriate comments about any issues you have identified with these areas and their future estate planning needs. • Cash flow projections: You must include detailed cash flow tables using Appendices 1 and 2 as a template, showing Sara and Freddie’s situation before and after your recommendations. These should be included as Appendices 1 and 2 to your SOA. • Recommendations: You should include superannuation projections up to the retirement age of your clients before and after your recommendations as Appendix C to your SOA. In addition, please show that your strategy will enable your clients to meet their retirement income goal for 21 years (based on Freddie living to age 86 and Sara to age 84). The SOA template An SOA has been commenced for Freddie and Sara Rosenberg, using the data collected in the interviews, their fact finder and their risk profile. You must complete the remaining sections in the SOA as directed. The SOA starts on the following page. Please review the sample case study and the text as a guide to completing your SOA. Statement of advice Prepared for Freddie and Sara Rosenberg Prepared by Your name Authorised Representative Number: 66666 AR address AR contact details Authorised Representative of EANWB Financial Planning ABN: 1010101010 Australian Financial Services Licensee Licence No. 101010 Head office: 88 Money Lane, Accumulation. You are entitled to receive a statement of advice (SOA) whenever we provide you with any personal financial advice. Personal financial advice is advice that takes into account any one or more of your objectives, financial situation and needs. This SOA is a record of the personal financial advice provided to you and includes information on the basis on which this advice is given, information about fees and commissions and any interests or associations which might influence the advice. If this advice includes a recommendation to you to acquire a particular financial product, other than securities, or an offer to issue or arrange the issue of a financial product to you, we will also provide you with a product disclosure statement containing information about the particular product to help you make an informed decision about that product. Be aware that the advice contained in the following SOA is valid for a period of 30 days only. If the plan is not implemented within this time, it will need to be reviewed for accuracy. Executive summary In this section, you need to provide your client with a concise summary of: • their situation • their objectives • your recommended strategy to achieve the objectives • the outcomes your client can expect from adopting the strategy. The client should be able to read this executive summary and understand the advice you are giving and the reason/s underpinning the advice, and be able to determine whether or not their goals have been achieved. There should be sufficient detail to allow the client to make a decision, taking into account any risk/s involved and your fees. It should be written without using jargon and in clear, unambiguous language, and be appropriate to their level of financial understanding. Your situation Summarise your clients’ current situation. Provide a brief statement about their family, employment, health, asset and debt position. (150 words) Answer here Assessor feedback: Resubmission required? No Your objectives List your clients’ objectives (i.e. their financial and non-financial goals, objectives and needs). Freddie and Sara expressed a desire to address their immediate needs and medium and long-term objectives. Summarise these in point form for Freddie and Sara to confirm. (100 words) Answer here Assessor feedback: Resubmission required? No Summary of our strategy and recommendations For the short term — up to one year Summarise your recommendations for your clients’ short-term goals. Present the strategies in point form to provide a quick picture of your intentions. Answer here Assessor feedback: Resubmission required? No For the medium term — two to five years Summarise your recommendations for your clients’ medium-term goals. Include strategies that cannot be considered immediately or require monitoring. Answer here Assessor feedback: Resubmission required? No For the long term — more than five years This is where you need to summarise your recommendations for your clients’ long-term goals. Answer here Assessor feedback: Resubmission required? No Summary of expected outcomes if you implement our advice For example: Should you proceed with the recommendations contained within this report, we estimate that: • You will reduce your debt by $XYZ and/or save $ABC. • You will build wealth in non-superannuation assets to $Y through regular contribution of $X. • Your objective of yyy will be achieved by… • Align the outcomes with the objectives. Answer here Assessor feedback: Resubmission required? No Risks in our advice Identify both financial and non-financial risks that can impact the desired outcome. Refer to the sample SOA for examples of relevant descriptions that should be included here and under each subheading below. Include risks that are specific to your strategies. Answer here Assessor feedback: Resubmission required? No Summary of our fees and commissions Answer here Assessor feedback: Resubmission required? No Your next steps Refer to the sample SOA for examples of relevant descriptions that should be included here. Answer here Assessor feedback: Resubmission required? No Body While this section contains similar headings as the executive summary, the information provided is more detailed and supports the recommendations made. As with the executive summary, it should be written without using jargon and in clear, unambiguous language, and be appropriate to your client’s level of financial understanding. Important information about you This section contains information about you that we used in preparing our advice, such as: • your reasons for seeking advice • what you would like to achieve • your personal and financial information. Present position Your reasons for seeking advice Outline why the clients sought advice. Answer here Assessor feedback: Resubmission required? No What you would like to achieve Summarise here what you understand to be your clients’ main objectives. Following our discussions, here is what I understand to be your main objectives and needs: Answer here Assessor feedback: Resubmission required? No Your personal and financial information Listed below is a summary of your relevant personal and financial details that you have provided. Personal information Personal details Fill the gaps Client 1 Client 2 First name(s) Freddie Sara Surname Rosenberg Rosenberg Age Marital status Married Married Health status Smoker status Non-smoker Non-smoker Employment status Permanent Part-time Employer name Occupation Sales representative Marketing consultant Annual salary $120,000 $90,000 Summarise the discussion points that could/need to be raised here. Answer here Assessor feedback: Resubmission required? No Children and dependant details Answer here Your existing insurance Fill any gaps. Personal insurance Answer here Car insurance Answer here Home contents Insurance Answer here Health insurance Answer here Your existing estate planning Summarise the clients’ existing estate planning provisions here. Answer here Assessor feedback: Resubmission required? No Financial information Current income and expenses details Income and expenses Complete the table: Freddie Sara Total Assessable income Answer here Answer here Answer here Net tax payable Answer here Answer here Answer here Yearly expenses Answer here Answer here Answer here Estimated surplus Answer here Answer here Answer here Discussion points: From the table you have prepared and your cash flow analysis, identify questions you will need to ask about their income, lifestyle, expenses and intentions, before you start preparing your strategies. What are the gaps? (100 words) Answer here Assessor feedback: Resubmission required? No Assets and liabilities Complete the table: Value Liability Net value Home Answer here Answer here Answer here Home contents Answer here Answer here Answer here Motor vehicles Answer here Answer here Answer here Personal assets Employer superannuation — Freddie Answer here Answer here Answer here Employer superannuation — Sara Answer here Answer here Answer here Savings account Answer here Answer here Answer here Investment assets Answer here Answer here Answer here Net worth Answer here Answer here Answer here Discussion points: Prepare discussion points you will use to obtain a better understanding about how your clients see their situation and future. What are their attitudes to debt, personal assets, investments and superannuation assets that can assist you with your advice? What are the gaps? (100 words) Answer here Assessor feedback: Resubmission required? No Incomplete and/or inaccurate information warning Note that if, for any reason, the information on which our advice is based is incomplete or inaccurate, then it may not be appropriate. Before acting on the advice, you should consider its appropriateness in light of your particular circumstances, needs and objectives. Your risk profile In this section, you need to provide: • an overview of the different risk profiles • the risk/return characteristics of various asset classes • the client’s risk profile including the appropriate mix of assets (the asset allocation) for the client’s risk profile, the appropriate investment return time horizon for that profile and any specific concerns. Discuss their attitudes to investing and any other experience or interests that can support your assessment. Answer here Assessor feedback: Resubmission required? No Strategy recommendations This section tells you: • what our advice is and why it is appropriate for you • reasons for our recommendations • what you need to consider and any risks associated with our advice. Read this section carefully and ask me if you have any questions. Recommended action — first year You will use your findings from the analysis you did in the assignment above as the basis for the information you will need to provide in this section. For each recommendation below discuss the reasons, risks, advantages and disadvantages. All recommendations should be listed here. They are to include investment and debt management recommendations. You are not required to provide specific advice to your client about their estate planning needs. However, if after analysis of their situation you believe that advice is required, you need to explain what advice they should seek and why. Concept. If you use technical terms or concepts in your discussion explain what the terms mean. For example, do not assume they know what ‘gearing’ or ‘franking’ means Note: You do not have to complete all of the recommendation boxes below. You can add more boxes if required. Recommendation 1 Answer here Assessor feedback: Resubmission required? No Recommendation 2 Answer here Assessor feedback: Resubmission required? No Recommendation 3 Answer here Assessor feedback: Resubmission required? No Recommendation 4 Answer here Assessor feedback: Resubmission required? No Things you should consider In this section briefly discuss strategies that you did not recommend that could be considered at another time and how they could benefit the clients. Refer to the sample SOA for examples of relevant descriptions that should be included here and under each subheading below. Answer here Assessor feedback: Resubmission required? No Retirement planning Briefly state what has been achieved with your strategies and highlight what still needs to be addressed or reviewed. Answer here Assessor feedback: Resubmission required? No Estate planning You have recorded the clients’ estate planning details for completeness of information gathered in the fact finder. You have explained that you cannot provide legal advice. However, if you see deficiencies in their current structure, discuss them briefly and suggest a course of action. (100 words) Answer here Assessor feedback: Resubmission required? No Taxation issues My strategies and recommendations have had the following impact on your tax position: Answer here Assessor feedback: Resubmission required? No Recommended asset allocation Proposed asset allocation Your investment assets are invested across various asset classes. The table below summarises: • weight: the proposed asset allocation resulting from our recommendations • risk profile weight: the recommended asset allocation for your investment risk profile • variance (weight): the variance between the recommended and proposed asset allocation. Asset allocation after implementation of recommendations Asset allocation Weight Risk profile weight Variance (weight) Defensive assets Australian cash Answer here Answer here Answer here Australian fixed interest Answer here Answer here Answer here International fixed interest Answer here Answer here Answer here Total for defensive assets Answer here Answer here Answer here Growth assets Australian equities Answer here Answer here Answer here Australian property Answer here Answer here Answer here International equities Answer here Answer here Answer here International property Answer here Answer here Answer here Total for growth assets Answer here Answer here Answer here Grand total Answer here Answer here Answer here Comments on proposed asset allocation versus your risk profile You need to explain the reason for any large (greater than 10%) variances here. Refer to the sample SOA for a discussion on variances. Discuss how the situation will change over time. Answer here Assessor feedback: Resubmission required? No Investment product recommendations Product recommendations Note that I can only recommend products on our recommended list, which has been approved by EANWB Financial Planning. Use the space below to list the products that you are recommending Freddie and Sara invest in and those that they already have that you recommend they keep. Freddie and Sara Rosenberg, following our investment strategy, we recommend that you invest in the following products: Answer here Assessor feedback: Resubmission required? No Relevant research material and product disclosure statements (PDSs) are attached for your attention. It is important that you read these documents carefully and contact us if you have any questions or if there are areas of the document that you do not fully understand. All of these products are on our approved recommended list. Note: You do not need to include these PDSs as part of your assignment. The above statement is a standard inclusion in an SOA. Cooling-off period Details on the cooling-off period for each product are provided in the PDS. Disclosure of remuneration, commissions and other benefits How are we paid? Commissions and fees — upfront, ongoing and financial planning advice fees If you are charging SOA preparation fees, implementation fees, ongoing advice fees, or any other non product related fees, you must provide the details here. You may need to source information outside of the subject notes to complete this requirement. However, you can use the examples of how fees are shared between advisers and licensees from the sample SOA if needed. If you are not charging these fees you may either delete the table below or fill it in with $0 as the fee charged to make it clear. Fee type Initial fee Initial fee paid to licensee Initial fee paid to adviser SOA fee Answer here Answer here Answer here Implementation fee Answer here Answer here Answer here Ongoing advice fee* Answer here Answer here Answer here Total Answer here Answer here Answer here *If the ongoing service fee is charged as a percentage of the product(s), you may use the table below instead. If you are charging a flat fee or an hourly fee you should use this table. Investment recommendations Summarise all of the products that you have recommended to the client here. Refer to the sample SOA for examples of what to include. You will need to source information outside of the subject notes to complete this table, based on the products you have used (or created). Assessor feedback: Resubmission required? No If you wish to implement the products I have recommended, there may be initial and ongoing fees applicable as detailed below. Product Initial fee Initial fee paid to licensee Initial fee paid to adviser Ongoing fees paid to licensee Ongoing fees paid to adviser Answer here Answer here Answer here Answer here Answer here Answer here Answer here Answer here Answer here Answer here Answer here Answer here Total Answer here Answer here Answer here Answer here Answer here Note: Please see the sample SOA for directions on completing the answers in the paragraphs below. Product providers will also charge a fee for the management of the funds invested in their products. The annual management fee charged by Answer here is Answer here%. The amount you will be charged will depend on the funds you have invested. For example, $ Answer here invested with them will incur a $Answer here annual management cost. Commissions Our policy on taking commissions from product and service providers is summarised below: Answer here Assessor feedback: Resubmission required? No Other fees and benefits EANWB Financial Planning and I may also receive additional benefits. Where the benefits received are greater than $300 in value, they will be recorded in a register that meets the requirements of the Financial Planning Association (FPA) Code of Professional Practice on alternative forms of remuneration. A copy of the register for EANWB Financial Planning is publicly available and can be provided on your request. Ongoing services You need to make sure that your client fully understands what you are offering in terms of ongoing service. Draft an outline of the level of ongoing service you intend to recommend to Freddie and Sara. In your outline, discuss the type of information that you would regularly provide to Freddie and Sara in relation to their financial planning needs. (250 words) Refer to the sample SOA for the sorts of services you could include here. Answer here Assessor feedback: Resubmission required? No Ongoing service fee What would you do to ensure that Freddie and Sara know the specific costs relating to an ongoing service? (100 words) Answer here Assessor feedback: Resubmission required? No Implementation schedule In order to ensure that your recommendations will be implemented efficiently, you need to ensure that all tasks that need to be completed by both you and the clients are itemised in the schedule. The schedule should highlight the priority of each task, as well as the order of completion. The time frame should be as specific as possible. Freddie and Sara Rosenberg, in order to proceed with our recommendations, you will need to complete the steps below: Action By whom By when Answer here Answer here Answer here Answer here Answer here Answer here Answer here Answer here Answer here Answer here Answer here Answer here Answer here Answer here Answer here Answer here Answer here Answer here Answer here Answer here Answer here Answer here Answer here Answer here Answer here Answer here Answer here Note: The recommendations contained in this SOA are current for 30 days only. Please contact me for further discussion if you are unable to act on our recommendation within this time frame. Assessor feedback: Resubmission required? No Authority to proceed By signing this authority to proceed, I/we Freddie and Sara Rosenberg acknowledge the following: • I/We acknowledge that the information I/we provided in the financial needs analysis has been used to arrive at the recommendations contained in this SOA. • I/We have read, understood and retained a copy of the SOA prepared by Your name dated Date . 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Using Internet websites such as https://www.irs.gov/ or other similar resources related to partnerships and corporate taxation, write a four to five (4-5) page paper in which you do the following:
Compare and contrast the tax rules and treatment applicable to corporations and partnerships. Indicate the major way in which the tax treatment affects the shareholders or partners. Explain at least two (2) reasons why a business owner might opt to become a partnership over a corporation. Provide support for your rationale. Imagine that you are a consultant and make the recommendation that the most advantageous business structure is a C-corporation. Justify why you would recommend a Corporation over a Partnership. Indicate tax rules that influenced your decision. Analyze what a business owner must consider when deciding what type of entity is best for the goals and vision of the business. Provide at least two (2) examples of research the owner must perform to ensure the proper election is made. Provide support for your rationale. Use at least two (2) quality academic resources in this assignment. Note: Wikipedia and other websites do not qualify as academic resources.
Your assignment must follow these formatting requirements:
Be typed, double spaced, using Times New Roman font (size 12), with one-inch margins on all sides; citations and references must follow APA or school-specific format. Check with your professor for any additional instructions. Note: Please refer to the APA template in the course shell for more information on APA style. Include a cover page containing the title of the assignment, the student’s name, the professor’s name, the course title, and the date. The cover page and the reference page are not included in the required assignment page length on Partnerships and corporate taxation.
The specific course learning outcomes associated with this assignment are:
Examine the tax rules that are unique to corporations, and the basic concerns relevant to shareholders and the corporation. Examine the tax rules and treatment related to partnerships. Use technology and information resources to research issues in corporate federal taxation. Write clearly and concisely about corporate federal taxation using proper writing mechanics.
Comparison of Partnership and Corporation Taxation
Determining legal organization structure is one of the most important decisions when establishing a business structure because; it will affect transferability, operational efficiency, financial reporting, personal liability, and taxation. Making the choice of the business structure may be complicated and the errors can be costly because the current tax laws make it hard to change the tax laws after the business starts operating. Two most common legal organization structures are corporation and partnerships. Comparing and contrasting applicable tax rules and treatment to partnership and corporation is crucial in ensuring that the investors make the correct investing decisions.
Comparison of Tax rules applicable to corporation and partnership
A corporation is a legal business entity that has its own identity separate from the owners or the shareholders. In partnership, on the other hand, there is no legal separation from its shareholders (Nonprofit Business Advisor, 2016).A corporation is considered as a tax payer according to IRS (Internal revenue Service and is required to file its annual income tax return under its own name and the identification number of the employer; partnership on, the, another hand, is not a taxpayer according to IRS, and it operates personal responsibility and legal name of the partners. Another difference is that corporations are required to pay taxes at the established corporation tax rate unless it meets IRS requirements of S-Corporation; however, a partnership does not pay its taxes as a business entity, but the profits and losses on the individual income are reported and tax payments are made based on individual tax rates.
How the tax treatment affects the partners and the shareholders
Corporations are required to distribute the surplus to shareholders as dividends after the payment of corporate tax. The dividends paid are determined by the number of shares held by each shareholder (Rupert, Pope, Anderson & Bandy 2017).Rupert, et, al further narrates that after receiving the dividends, the shareholders are required to file the payments individually and then pay the individual tax rate on the distribution, which causes the double taxation of the profits. The double taxation affects the shareholders because the shareholders pay taxes on both the individual level and the corporate level.
IRS considers the partners as being in self-employment, not a business; thus any payment or compensation that the partner receives is advancement…………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………….. Partnerships and corporate taxation