BAFI 1014 Personal Wealth Management: Case Study Assessment

This practical assignment is a case study analyzing the financial situation of Alex and Rachel William. The assignment focuses on calculating their tax liabilities, including individual and combined tax scenarios, capital gains tax from share sales, and the impact of capital losses. It also assesses the expected return from Alex's superannuation account and suggests adjustments to his investment strategy based on his changing risk profile. The solution includes detailed calculations, figures, and a bibliography of relevant sources. The student explores the benefits of tax splitting and provides financial planning advice considering the couple's assets, income, and liabilities, as outlined in the provided case study brief for BAFI1014 Personal Wealth Management.

Running head: TAX AND WEALTH MANAGEMENT
Tax and Wealth Management
Name of the Student:
Name of the University:
Author Note:

1TAX AND WEALTH MANAGEMENT
Answer to Question (A):
The tax liability of Alex William and Rachel William combined comes to about AUD 39472.
The supporting calculation are given below,
Figure 1: Combined Tax Payable
Source: By the Author

2TAX AND WEALTH MANAGEMENT
Figure 2: Alex William Tax payable
Source: By the Author
The individual taxable income of Alex William comes to about AUD 2455. The supporting
calculation are given above.

3TAX AND WEALTH MANAGEMENT
Figure 3: Rachel William Tax payable
Source: By the Author
The individual taxable Liability of Rachel William comes to around AUD 27822.
Figure 4: Tax Savings
Source: By the Author
The combined tax liability of the couple comes to AUD 39472, while if they are taxed
individually and the total of their tax liability comes to about AUD 30277. The savings on the
Tax because of splitting of the tax is AUD 9194.

4TAX AND WEALTH MANAGEMENT
Answer to Question (B):
The Capital Gain incurred on the selling of the Dicker Data shares comes to around AUD
16000.
Figure 5: Capital Gain
Source: By the Author
Thus if Rachel William does not sell her Galaxy Resources Limited Shares she would have a
tax liability over AUD 16000. The benefit of selling the Galaxy Resources Limited Shares is
the reduction in the Capital Gain tax liability.
Figure 6: Capital Loss
Source: By the Author
The loss in the sale of the Galaxy Resources Limited comes to about AUD 6650. Thus this
amount would reduce the capital gain by this amount. Thus it saves Rachel William from
paying the capital gain tax.

5TAX AND WEALTH MANAGEMENT
Figure 7: Net Capital Gain Tax
Source: By the Author
Answer to Question (C):
The expected return from the Super-Annuation account of Alex William comes to around
4.17%. or AUD 20850.
Figure 8: Expected Return
Source: By the Author
The Fund fluctuates too much on account of investment in volatile and risky asset class like
equity. It is further invested in domestic and global market equity, thus increasing the
volatility of the fund. Since he was an aggressive investor this fund was suitable but now
since he is becoming a conservative investor he should reduce investment in volatile asset
class and invest in cash and fixed interest.

6TAX AND WEALTH MANAGEMENT
Bibliographies:
Andonov, A., Bauer, R.M. and Cremers, K.J., 2017. Pension fund asset allocation and
liability discount rates. The Review of Financial Studies, 30(8), pp.2555-2595.
Kellner, F. and Utz, S., 2019. Sustainability in supplier selection and order allocation:
combining integer variables with Markowitz portfolio theory. Journal of cleaner
production, 214, pp.462-474.
Law, K.K. and Mills, L.F., 2015. Taxes and financial constraints: Evidence from linguistic
cues. Journal of Accounting Research, 53(4), pp.777-819.
Martin, I., 2017. What is the Expected Return on the Market?. The Quarterly Journal of
Economics, 132(1), pp.367-433.
Powers, K., Robinson, J.R. and Stomberg, B., 2016. How do CEO incentives affect corporate
tax planning and financial reporting of income taxes?. Review of Accounting Studies, 21(2),
pp.672-710.
Wanless, P.T., 2018. Taxation in centrally planned economies. Routledge.
Way, R., Lafond, F., Lillo, F., Panchenko, V. and Farmer, J.D., 2019. Wright meets
Markowitz: How standard portfolio theory changes when assets are technologies following
experience curves. Journal of Economic Dynamics and Control, 101, pp.211-238.
Ziyin, L., Wang, Z., Liang, P.P., Salakhutdinov, R., Morency, L.P. and Ueda, M., 2019. Deep
Gamblers: Learning to Abstain with Portfolio Theory. arXiv preprint arXiv:1907.00208.