James has recently become eligible for the Age Pension. He has the following assets and liabilities as
Question:
James has recently become eligible for the Age Pension. He has the following assets and liabilities as at 1 July 2018:
Details
Amount ($)
Personal residence 510,000
Funeral bonds 40,000
Motor vehicle 10,000
Household and personal effects 22,000
Holiday home 240,000
Term deposit at 1.50%. 60,000
Share portfolio at 5.50% 30,000
Debentures at 3.00%. 20,000
Jewellery 35,000
Personal loan on Motor vehicle 2,000
Mortgage on Personal residence 150,000
Superannuation 100,000
He is not drawing any amount from the superannuation fund. On 1 August 2018, he decided to gift one of his relatives $10,000. He also decided to take a part-time job with his local art dealer and expects to earn $150 per week.
James has come to see you for advice on 3 August 2019 for his Age Pension entitlement.
Required:
a) Calculate James' assessable assets and financial assets.
b) Calculate James' Age Pension entitlement.
c) Calculate James' total gross income from all sources on annual basis.
d) Discuss any legal strategies that you can suggest to assist James to maximise his pension entitlement.
(Australian standard)
Intermediate Accounting
ISBN: 978-0470616314
IFRS edition volume 2
Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield