Planit:Singapore Sale of a Business Case Study
This case study is specific to financial planning in Malaysia, so has fixed values rather than indices by country. For a similar case study applicable to other case studies, please see Planit:Canadian Sale of a Business Case Study, Planit:UK Sale of a Business Case Study, or Planit:Malaysian Sale of a Business Case Study.
Example Problem One:
To completely incorporate a business into your clients' financial position, you must show the business as an owned asset, consider it as the basis for fluctuating income, and add a sale of a business revenue to the Pensions and Other Revenues screen.
Shou owns a small clothing store, which she is planning on selling when she retires. It is worth approximately $250,000, and she feels that this value will grow with inflation until she sells it.
Solution Using Detailed Pension Information:
Go directly to the Pensions and Other Revenues screen.
- Click on the Add button above the current revenue entries
- Enter an appropriate description in the Description field.
- In the drop-down menu beside Owner change the setting to Spouse
- The $250,000 value of the business can be entered in the Amount per Year field
- Both the From Year and To Year fields should be set to Shou’s target retirement year, since the sale of the business is a one-time revenue.
- The Index Rate can be left at the client’s default inflation rate.
- Set Percent Taxable to 100%, since the revenue will simply be subject to income tax.
Note: This does not mean that the entire value of the revenue will be payable in tax, but that the Web Advisor will include the entire amount in the calculation of income tax payable that year, using Singapore income tax tiers.
- Set the Amount on Death to 100%, since the business revenue would still pay out.
- The Amount on Disability would be 100%, since disability would not affect it.
- The drop-down menu beside Model As should be set to Defer with Retirement since Shou will sell the business when she retires.
- Click Save to return back to the summary Pensions screen