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Kaplan SRP TTR Strategy

Discussion in 'Financial Planning Study Group' started by ParaplannerMel, 24th Oct, 2011.

  1. ParaplannerMel

    ParaplannerMel Member

    Joined:
    20th Apr, 2011
    Posts:
    5
    Location:
    Melbourne, Vic
    Hi!

    I have found myself going around and around in circles with this assignment and am, quite frankly, OVER IT!!!

    Regarding a TTR strategy for Karen during the three years leading to her retirement. Given receipt of Centrelink entitlements is one of their objectives, I am keeping this in mind.

    However, I am finding that I keep coming back to the decision that a TTR strategy would not work for them.

    Regardless whether Karen salary sacrifices her income or receives it as take-home pay, Centrelink assess that salary under the Income Test. Additionally, if Karen commenced an account-based income stream to 'replace' her salary sacrificed income, Centrelink will assess the difference between the income chosen and the social security deduction amount.

    Therefore, and PLEASE correct me if I am wrong, if Karen salary sacrificed her salary to superannuation (being mindful of caps, etc.), Centrelink will assess both that income and the income (less the social security deduction amount) she draws from the account-based income stream.

    This means that Centrelink essentially assess 'more' income than there actually is IYKWIM. So for Karen, a TTR strategy effectively negates any Age Pension for Michael, let alone the fact that, given her MTR is 15%, salary sacrificing her salary to superannuation can put her in a worse position as she loses the benefit of the MAWTO and Low Income Offsets.

    Congratulations if you haven't nodded off by now. I'm just putting my thoughts (and frustrations) out there because I am feeling very much like the Kaplan study material has grossly under-prepared me for this assignment.

    Thanks,

    Mel :confused:
     
  2. DylanM

    DylanM Member

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    30th Jul, 2011
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    Location:
    Wollongong, NSW
    The idea is to boost her super + create (slight) tax saving. Move spare money in CMT into her super as it is not assessed under asset test for Michael. They want you to do a TTR. Submitted & passed, using TTR :)
     
  3. ParaplannerMel

    ParaplannerMel Member

    Joined:
    20th Apr, 2011
    Posts:
    5
    Location:
    Melbourne, Vic
    I too submitted and passed with my first attempt - except my recommendations outlined that a TTR strategy was not viable.

    I guess the underlying factor is that as long as you can support and justify your response, you can't really go wrong!!!! ;)

    Thanks for your response.

    :)
     
  4. ParaplannerMel

    ParaplannerMel Member

    Joined:
    20th Apr, 2011
    Posts:
    5
    Location:
    Melbourne, Vic
    No, guddu, I won't pass on my assignment to you - for reference purposes or not.

    The idea behind this forum (as I see it) is for people to discuss ideas and issues, not plagiarise other people's work.
     
    Simon Hampel likes this.
  5. shawti

    shawti Member

    Joined:
    7th Dec, 2011
    Posts:
    19
    Location:
    Perth, WA
    Can someone please help me understand something about TTR??

    It states on pg 3:36 that with Transition to Retirement, you dont necessarily have to reduce your work hours, you can continue full time work.
    Does this same rule apply to TTR Pension pg 4:22?? Or does this work differently??