The hole should be at least big enough to fit the whole root ball in, you do not want to disturb the roots. I always recommend double the size of the bag or container the plant came in is a good rule. This allows the soil to be broken up especially since you stated it is a bit clayish.
Adding compost or sheep pellets to the soil will greatly add in adding nutrients to the soil but also aid in helping break that soil up and allowing for better drainage.
Magnolias like slightly acidic soil, and you can purchase acid fertiliser from stores for acid-loving plants.
The Palmers Team
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