Join our investing community

Tax Planning Help

Discussion in 'Financial Planning Study Group' started by AO, 30th Nov, 2010.

  1. AO

    AO Active Member

    Joined:
    1st Mar, 2010
    Posts:
    27
    Location:
    Perth
    Hi guys,

    Just need some help with Tax Planning and came across the term:

    "Net Savings Capacity"

    I've searched high and low in the course notes for a proper definition and across the web for it.

    How do you define and calculate it?

    Anybody who wants to discuss, let me know.

    AO
     
  2. serge g

    serge g Active Member

    Joined:
    16th Oct, 2009
    Posts:
    31
    Location:
    VIC
    net income minus expenses

    Net savings capacity is the cash that's left after they've paid their expenses. I imagine it would be after-tax income minus cash expenses. It's a fairly common sense concept.

    Kaplan have an email service for every subject that's designed to answer these questions. Can anybody explain to me why they prefer to post the question here than email Kaplan about it?
     
  3. Jackson

    Jackson New Member

    Joined:
    15th Sep, 2010
    Posts:
    3
    Location:
    Hobart
    look at net income plus other income e.g from ex husband and plus other expenses.

    this will give you the net savings capacity.

    Have you done questions 3(C) provision for tax what figure did you get and did you encompass the increased level of HELP debt as a result of increased income?
     
  4. AO

    AO Active Member

    Joined:
    1st Mar, 2010
    Posts:
    27
    Location:
    Perth
    Nah i didn't have the HELP debt included.

    I got around 14k for tax liability.

    How about you?
     
  5. AO

    AO Active Member

    Joined:
    1st Mar, 2010
    Posts:
    27
    Location:
    Perth
    Successfully completed this assignment and did the exam. Slaughtered them both.

    Need help? I will be happy to give pointers.
     
  6. pjgust

    pjgust PJG

    Joined:
    5th Jan, 2011
    Posts:
    6
    Location:
    SA
    Hi - seeing as you slaughtered the Tax Planning subject, any chance you could help me out with my assignment? I have to have it finished tonight and submitted tomorrow, and I'm panicking !~
     
  7. AO

    AO Active Member

    Joined:
    1st Mar, 2010
    Posts:
    27
    Location:
    Perth
    Where's the problem?
     
  8. pjgust

    pjgust PJG

    Joined:
    5th Jan, 2011
    Posts:
    6
    Location:
    SA
    Ok, here goes....

    I'm re-submitting my assignment, and the marker has said in a number of places that I need to look at the LITO, but as far as I can see, they are only entitled to this if their income is lower than $60,000?

    Also, I'm screwing up the franking rebates, getting confused with imputation credits, and not understanding this at all.....

    Pleeeaaaseee help!!

    Thanks so much...........
     
  9. AO

    AO Active Member

    Joined:
    1st Mar, 2010
    Posts:
    27
    Location:
    Perth
    I assume you mean for Ron and Andrea.

    Are you using the latest figures?

    They are only ineligible for the Low Income Tax Offset and Taxable Income if their income exceeds threshold of $63,750.

    Use the ATO website to calculate how much of the LITO they are entitled to.

    Tax Tools - Low income tax offset calculator - 2010

    If you don't understand franking credits now then you will fail the exam. Read the subject notes again get better grasp because the worked examples are very good.

    Specifically...what dont you understand about dividends?
     
  10. plan

    plan Active Member

    Joined:
    4th Nov, 2009
    Posts:
    34
    Location:
    nsw
    Hi

    Just a couple of questions for those who have completed the assignment:

    1. Has anyone done Q2 (b) Re: Ron & Andrea
    Explain the impact of employer super contributions and the tax impact of these contributions.

    Do they mean the tax impact to the couple or to the super fund?

    2. Question 4 (c) What strategies have you come with for Susan to reduce her tax liability?

    Thanks
     
  11. AO

    AO Active Member

    Joined:
    1st Mar, 2010
    Posts:
    27
    Location:
    Perth
    1. No they mean what affect does the contribution have on their taxable income. The contributions lower Andrea's taxable income. Calculate what her assessable income should be.

    2. There are lots. See the subject notes for tax minimisation. I only suggested Negative Gearing and it was fine.
     
  12. plan

    plan Active Member

    Joined:
    4th Nov, 2009
    Posts:
    34
    Location:
    nsw
    Thanks for your help AO.

    Another question - how many recommendations did you provide for Q1 d - Sandra's savings?
    Likewise for Q2 f - recommendations for Ron and Andrea.

    Are they looking for a few or is 1 enough?
     
  13. AO

    AO Active Member

    Joined:
    1st Mar, 2010
    Posts:
    27
    Location:
    Perth
    For Sandra i provided 3 recommendations and explained them all and the tax affects.

    For 2F i just used 1 recommendation (salary sacrifice) and explained that
     
  14. plan

    plan Active Member

    Joined:
    4th Nov, 2009
    Posts:
    34
    Location:
    nsw
    Question 3 (b) Roberto case

    Do you need to show any calculations when discussing capital gains tax for each scenario, sold now, income received if the asset was retained and how the income would be taxed in Roberto's hands?

    Thanks
     
  15. AO

    AO Active Member

    Joined:
    1st Mar, 2010
    Posts:
    27
    Location:
    Perth
    Of course. if you don't it's an instant re-submission.

    I know this because i didn't and then did
     
  16. plan

    plan Active Member

    Joined:
    4th Nov, 2009
    Posts:
    34
    Location:
    nsw
    I thought the calculations was for part C, and not B. Can you confirm please?
     
  17. AO

    AO Active Member

    Joined:
    1st Mar, 2010
    Posts:
    27
    Location:
    Perth
    You need to explain every CG event in B from the family home to the share portfolio in (b). Showing method used and the working behind it.

    In part (c) you calculate the tax liability for his total assessable income.

    Part B is calculating capital gains. Part C is calculating tax liability from salary and sale of assets.
     
  18. plan

    plan Active Member

    Joined:
    4th Nov, 2009
    Posts:
    34
    Location:
    nsw
    Thanks for clarifying AO
     
  19. plan

    plan Active Member

    Joined:
    4th Nov, 2009
    Posts:
    34
    Location:
    nsw
    Forgot to mention the 2nd part of Q2 (b) ...

    Discuss capital gains tax implications for each of the estate assets in terms of

    - if sold now;
    - the income that might be received if each asset was retained
    - how that income would be taxed in Roberto's hands
    .

    What does CGT have to do with income earned? They are two different things.

    Is it meant to be a separate Qn? The income is already given. Am I missing something?

    Did you need to use the index method? It seems all use the discount method of calc CGT.

    Question 2 (e)
    Did you have a cash flow statement to show the salary packaging impact.

    Thanks!
     
  20. plan

    plan Active Member

    Joined:
    4th Nov, 2009
    Posts:
    34
    Location:
    nsw
    Hi

    Can anyone help with the above? Need to hand in this assignment this week.

    Also, for Q3 e - is the cash flow after the settlement of the estate, after recommendations provided in (d), of after assets are sold in (c)?

    Likewise with (f) which scenario are we meant to be comparing?

    Thanks