Howard and Jeanette are planning to purchase an investment property in a bayside suburb of a capital city. The purchase price is $650 000. Jeanette was the beneficiary of the sale of her deceased mothers house and has the money available for investment. As Howard and Jeanette are in their mid fifties and expect to retire in the next 8 years or so, they are wondering how they should purchase the property. They could either buy it in Jeanettes name, in the name of a discretionary family trust or in the name of a family company. Jeanette is on a MTR of 37% whereas Howard is on a MTR of 32.5%. The couple has 2 children aged 13 and 15. During the period of ownership, the property is expected to earn a net return of 4% p.a.

1. What are some of the issues you would consider in determining in which name or entity the property should be purchased in?
2. Would there be any tax benefits to be gained in distributing income earned from the property to the couples 2 children? Discuss
3. What difference would the tax structure have on the way that the capital gain on sale would be calculated and taxed?