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The strategy for Vince and Zelda

Discussion in 'Financial Planning Study Group' started by MI$H, 14th Feb, 2009.

  1. MI$H

    MI$H Member

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    Hi everyone out there,

    Now I am up to question 4 and I have recommended that the clients sell the investment property to fund personal expenditure and to help balance out the portfolio. The issue now is CGT, can this be minimised? I suggested Zelda salary sacrifice in that financial year to minimise her taxable income or perhaps they live in the investment property for a while and sell the main residence, but I assume with that they will still incur CGT when they do eventually sell the property after residing in it.
    My question is I guess what has every body else recommended the clients dispose of to achieve the desired goals.

    Thanks,
    MI$H
     
  2. danwatts

    danwatts Member

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    Are you refering to Q 3-Data analysis or 4 strategy recommendations ? If so, under which heading are you writing this ?

    dan
     
  3. MI$H

    MI$H Member

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    Question 4: Strategy recommendations, the implications of selling their non super assets.
     
  4. danwatts

    danwatts Member

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    I have recommended the use of income splitting as a general strategy for them as Zelda is on a lower MTR. The majority of the tax implications, such as CGT on the investment property are unavoidable as far as I am aware ? So I guess it would be a question of whether the tax implications are worth being liable for to acheive a 'balanced' portfolio ?

    Having said that, Zelda is on the lowest MTR so it would be advantagous for the couple for her to dispose of it as opposed to Vince selling some of his assets (higher MTR, hence more CGT liability)

    These are the issues I have considered, I am fairly new to this to use this with caution ! :) Feel free anyone to correct/ discuss this :)
     
  5. bowling2020

    bowling2020 Bowling

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    Hi,

    In this part of the assignment (that I had to redo), I suggested several strategies to this issue, esp with tax liability.

    I recommended that they should sell their property when they retire (Vince first), because that would mean the majority of their income would derive from their investments only (not so much from assessable income).

    I also added that they should salary sacrifice to the limit in the year when they wish to sell some of their equities to make it tax effective. And they should consider selling their poorer performing shares (like Telstra) and invest in some better performing ones.

    Hope this helps,
     
  6. MI$H

    MI$H Member

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    Hi Bowling 2020,

    How did you advise they achieve their short term and medium term goals inline with the time frames?? If you don’t mind me asking of course.
     
  7. Shady

    Shady Well-Known Member

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    Is there any chance you could attach a PDF file of the assignment?

    Cheers
     
  8. MI$H

    MI$H Member

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    Hi Shady1,

    Assignment attached. Hopefully you can open it.

    Regards,
    MI$H
     

    Attached Files:

  9. da_ragazzo

    da_ragazzo Member

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    Hi
    I failed that question as well.....do we actually have to write 500 words x 7?
    Can anyone else who's passed this assignment share there thoughts or any tips???
     
  10. CJ. Wentworth

    CJ. Wentworth Well-Known Member

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    Yeah, I actually went more for a page for each question. I tried to stick around the 500 work mark, but it didn't seem to matter that I sometimes went over.

    Ragazzo did they give you any tips about what you missed?

    Danwatts and Bo have both outlined how I answered it. Basically mentioned CGT, MTRs and ways to reduce the impact of CGT (through Salary Sacrifice)
     
  11. danwatts

    danwatts Member

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    Hi CJ

    I have just submitted my assignment but don't feel overly confident about it. Did you pass first time or did they give you good feedback as far as what they require ?

    Cheers

    D
     
  12. CJ. Wentworth

    CJ. Wentworth Well-Known Member

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    Nah I failed by 1 point. You need 16/20.

    Yeah they pretty much gave me the answers. They seem to be looking for specific things to be covered and as long as you have the basic idea, they then go ahead and ask you to mention the things that you didn't.

    For example I hadn't mentioned the possibility of selling Zelda's investment property (as I didn't believe she should), and they called me out on it. In my resubmission I added a sentence along the lines of "Zelda could sell her IP, but I don't feel she should because..."

    Upon which I got full marks lol.
     
  13. danwatts

    danwatts Member

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    Hi CJ,

    Thanks for the advice.

    cheers

    D
     
  14. CJ. Wentworth

    CJ. Wentworth Well-Known Member

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    No probs :). How'd you fare in the recent floods?
     
  15. danwatts

    danwatts Member

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    Flooded car and a mouldy house, I have never seen so much rain in one week ! My house did not burn down and I have not lost any mates so I have nothing to complain about !

    What about you guys ? You would have been able to surf the mulgrave no doubt !
     
  16. CJ. Wentworth

    CJ. Wentworth Well-Known Member

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    Lol, I wasn't gonna risk it. My street didn't go under... or more to the point, we could at least drive on it.

    But I do agree, I have never seen so much rain and I felt sooo bad when I saw the storm cells heading back to you guys (and Ingham of course)
     
  17. Nuri Birer

    Nuri Birer New Member

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    Sorry. I have just started the assigment and a bit behind. But soon I will get there
     
  18. Nuri Birer

    Nuri Birer New Member

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    At the end of the Easter break, I will try to complete?