Sam and Mack have been life partners for many years, although they have no children. The following
Question:
Sam and Mack have been life partners for many years, although they have no children. The following information is relevant to the years ended 30/6/2023 and 30/6/2024.
Mack, date of birth 19/5/1969, is employed full time as a journalist. Mack's employment contract includes a base salary of $200,000, with superannuation of 12% payable in addition to that base salary. Mack also salary sacrifices a personal contribution of 5% of base salary.
The fund is an APRA regulated industry fund, and Mack is in the accumulation (defined contribution) division, with an annual return averaging 5% pa after fees and insurance. Income protection insurance is an additional $500 per month. The account balance at 30/6/2022 was $1.5m, and at 30/6/2023 had increased to $1.65m.
Sam, DOB 3/3/1962, is self employed as a writer. Last year Sam's net taxable income was $55,000. Sam has contributed $5,000 to superannuation each year since 2018 and has claimed a tax deduction for this amount.
Sam's account is in a MySuper account with an industry fund. It is an accumulation (defined contribution) fund, with an annual return averaging 4% pa after fees and insurance. Sam's balance at 30/6/2022 was $450,000, and at 30/6/2023 had increased to $477,500.
Both superannuation funds invest in a diversified portfolio that includes franked dividends. The trustees trade shares on a regular basis and realise net profits from share trading.
The couple is planning to move from their home in the city to a semi-rural property in the Perth Hills. Their current property is valued at $1m, and the new property will cost $1.2m. They have access to savings to pay the difference in price. In addition to an inheritance of $800,000 that will be distributed to Mack later in the 2023/24 income year.
- Taking account of the proposed property transaction and the inheritance that is anticipated during the year, advise what opportunities are available to increase their superannuation ahead of retirement.
- Should they set up a self-managed superannuation fund? Briefly set out the reasons why you think that a SMSF would or would not be appropriate for these clients.