Stephen And Rachael

Stephen And Rachael

 Background to part A: Stephen and Rachael

Stephen and Rachael are members of the S&R Superannuation Fund. Stephen is 60 and his SM SF member balance is $880,000 comprising $132,000 tax-free component and $748,000 taxable component. Rachael is 59 and her SM SF member balance is $100,000 which is all a taxable component. Stephen and Rachael’s SM SF balances are both in the accumulation phase. Stephen and Rachael have just retired. Neither of them have had any superannuation contributions made on their behalf in the current financial year and all previous years’ contributions were within their annual contribution limits.

Required

Question 5.1              

Based on 2017/18 financial year rates, explain why it would be possible for Stephen to withdraw $300,000 of his SM SF balance as a lump sum and then give the funds to Rachael for her to contribute the funds back into their SM SF as a non-concessional contribution. 

Question 5.2  

If Stephen withdraws $300,000 from his $880,000 SM SF balance, what tax-free and taxable components would comprise the $300,000 amount withdrawn? 

Question 5.3  

If Stephen withdraws $300,000 from his $880,000 SMSF balance, his SMSF member balance will reduce to $580,000. What tax-free and taxable components would comprise the residual $580,000? 

Question 5.4  

If Rachael adds the $300,000 proceeds to her SMSF member account as a Non-Concessional Contribution, what would be the resulting tax-free and taxable components of her SMSF member account? Please show both the dollar figures and the percentages of the new tax-free and taxable components. 

Stephen And Rachael

Background to Part B: Peter and Eliza

Peter and Eliza are members of the P&E Superannuation Fund. Peter is 67 and his SM SF member balance is $650,000 comprising $455,000 tax-free component and $195,000 taxable component (from a taxed fund). Eliza is 68 and her SM SF member balance is $560,000 which is a 100% taxable component (from a taxed fund).

Peter and Eliza have two children, Max who is 40 years old and financially independent, and Mildred who is 45 years old, intellectually disabled and requires full-time care.

Question 5.5  

Upon Peter’s death, his benefit is to be split 50/50 between his children Max and Mildred.

How much tax would be payable upon Max inheriting his share of Peter’s death benefit? (Please base your answer on 2017/18 financial year tax rates).

Question 5.6  

Upon Peter’s death, his benefit is to be split 50/50 between his children Max and Mildred.

How much tax would be payable upon Mildred inheriting her share of Peter’s death benefit? (Please base your answer on 2017/18 financial year tax rates). 

Question 5.7  

Upon Eliza’s death, her benefit is to be split 50/50 between her husband Peter and her son Max.

How much tax would be payable upon Max inheriting his share of Eliza’s death benefit? (Please base your answer on 2017/18 financial year tax rates). 

Question 5.8              

Upon Eliza’s death, her benefit is to be split 50/50 between her husband Peter and her son Max.

How much tax would be payable upon Peter inheriting his share of Eliza’s death benefit? (Please base your answer on 2017/18 financial year tax rates).