Dennis has come to see you for advice on maximising his superannuation and minimising his tax payable as well as estate planning advice. Denis is aged 53 and is married to Ella, aged 49. They have 2 adult children (twins) aged 24, who are considered financially independent from Dennis and Ella.

 

Dennis is an architect and is paid a salary of $150,000 per year. Ella works part-time as a receptionist and earns $39,000 per year. Both their employers contribute 10% of their salaries (the Superannuation Guarantee) into their respective superannuation funds.

Dennis' current superannuation balance is $450,000 and is invested in a conservative investment option. He is wanting to retire in 10 years' time at age 63 with a superannuation balance of $700,000.

 
REQUIRED

Dennis tells you that he wants to salary sacrifice $20,000 to his superannuation fund by 30 June 2022, but he's heard that there are limits to the amount he can contribute to super. You agree and advise Dennis that if does this, he would exceed the concessional contribution limit.

Instead, the maximum amount you would recommend Dennis salary sacrifice into superannuation for the current income year is?

If Dennis did salary sacrifice the $20,000 and exceed the concessional contribution limit, what are two tax or other consequences of him doing so? Be specific.

Other than salary sacrificing, what else could Dennis do to increase his superannuation balance to his goal of $700,000 by the time he retires? Provide two recommendations.

In terms of Dennis' estate planning you recommend he and his wife Ella act as each other's Enduring Power of Attorney (EPOA). explain the purpose of an EPOA, as well as when an EPOA comes into force (begins) and when it ends.

Dennis also advises you that in the event of his death he would like his superannuation balance split evenly between his wife and two adult children. What should he do to ensure this occurs? Explain your answer.

Assume Dennis later passes away. At the time of his death, his superannuation balance is $540,000, of which 20% is tax-free. As per his wishes, his superannuation balance is split evenly between his wife and two adult children so that they each receive $180,000. In this scenario, how much tax is payable by each recipient? Show your workings.

Enter tax payable by Ella (Dennis' wife):
Enter tax payable by each adult child:

Answer rating: 100% (QA)

To determine the maximum amount that Dennis can salary sacrifice into his superannuation for the current income year we need to consider the concessional contribution limits For the 20222023 financial ... View the full answer