lecture 8

Question 1

 Social Security

Answer 1

o Government outlays 1/3 of its expenditure towards social security
o Overall aim is to provide a background of fairness and opportunity for all Australians
o Aim is to provide minimum standard of living for all Australians

Question 2

 A financial planner needs to

Answer 2

o Ensure the client is aware of all benefits available to them
o Consider social security strategies that can improve a client’s overall income and long-term asset position
o Consider the ancillary benefits that are provided to social security recipients

o	Consider the direction of policy, what might the government do?
	Age eligibility increasing
	‘Taper’ rates
	Inclusion of more assets
	Change indexation

Question 3

 Aging population – Objectives of the government

Answer 3

o Encourage retirees to be self-reliant in terms of their income needs

o Helping to support retirees and the ages that have limited or insufficient funds by providing a government aged pension
 Pension payments are targeted to those in need
 Real value of payment rates are maintained
• Rates increased in line with inflation
• Pension payments maintained as a proportion of MTAWE

o Helping the aged to stay at home for as long as possible with various support mechanisms

Question 4

 Age pension – PS and ES

Answer 4

o PS is designed to assist you with household bills and everyday expenses

o Made fortnightly with regular payment

o ES is ongoing to help eligible households with any impact from the carbon price on everyday expenses

o Treated as non-taxable, and is not considered income
 Not available to new age pensioners in 2017
 Existing will still receive it

Question 5

 Assessable Assets

Answer 5

o Household contents and personal effects

o Motor vehicles, boats, and caravans

o Collections, such as stamps

o Financial investments – cash, term deposits, shares

o Superannuation assets

o Investment property

o Business assets

o Surrender value of life insurance policies

Question 6

 Non-assessable assets

Answer 6

o Your principal home and generally up to 2 hectares
o Rural customers and primary producers with larger properties may be exempt
o All Australian superannuation and rollover investments not in the drawn down phase
o Any property or monies left to you in an estate
o A cemetery plot up to 12.5k
o Aids for people with disability

Question 7

 Gifting Rules

Answer 7

o Plan ahead
o Gifting rules apply to any assets 5 years before you start receiving the age pension
o Not gifting the allowable gifting amount in a financial year, 10k or 30k over a 5-year period
o Apply rules 5 years before receiving pension

Question 8

 Income test – assessable income

Answer 8

o Deemed income from financial investments, including money in superannuation funds if you have reached age pension age
o Gross employment income
o Income from sole trader
o Dividends

Question 9

 Income test – deemed income

Answer 9

o	Financial investments include
	Savings accounts and term deposits
	Managed investments, loans and debentures
	Listed shares and securities
	Gifts

o Financial investments do not include
 Your home and contents
 Cars, boats and caravans
 Antiques, stamp or coin collection