Pete (56 years old) and Caroline (47 years old) Strong have 2 children John aged 18 & Melody aged 16. Pete is a professional race-horse trainer and Caroline a Personal Trainer. They own the following investments:

• A term deposit in both names of $120,000 paying 4% interest.
• A Share portfolio valued at $160,000 paying $35,000 fully franked dividends per year.
• They Principal place of residence is a $1.6 million house on the canal at Broadbeach Waters and they have a $250,000 mortgage remaining.

Pete earns $105,000 net per annum.

Caroline currently earns $60,000 net as a personal trainer for a local gym.

Pete and Caroline have been approached by some friends to help establish a race horse training business in Australia, and think its a perfect fit for success in Australia given our location and the racing scene in this country

Their friends would invest $250,000 and have asked them for $150,000 contribution and all would work at least 35 hours a week on the business model.

Caroline is concerned about protecting all their hard-earned personal assets and a fair distribution of work and returns. Pete is wondering about the eventual exit strategy.

What Structure(s) would you recommend they put in place to protect each of their existing personal assets, their business assets and minimize tax and run the business if they decide with their friends to proceed with this business idea.

Include advantages and disadvantages of each suggested structure

Advise them on the best tax effective investment structures to both protect their assets and minimize tax. In your answer, provide at least two alternative structures and discuss the advantages and disadvantages of each structure for their situation and which one would you recommend as the best way forward and why.

Are there any other considerations when choosing the appropriate structure for them?