Question

Scott and Ann are a young married couple aged in their late 30's. They have two children - Pat, aged 12, and Kent, aged 8 - and Ann is expecting their third child. Scott is a self- employed engineering consultant operating as a sole trader, Ann has just taken 6 months maternity leave and will only return to the workforce on a part-time basis working 3 days per week.

Scott and Ann approach you for financial planning advice and, as part of the process, ask you to determine tax-effective strategies that may be appropriate for their circumstances. You determine the couple's financial circumstances for the current year to be as follows:

_ Investme nts: Savings account M an aged fundAustralian e duiti ElUf'llE acguired in Juli zonaforgmom I: Investment unit (Acquired in Januar1.r 1993 for $190 000 290 000* when the CPI indexwas 120.3] Superannuation: {Balanced investment option 40 000 - (Conservative investment option] -_ Liabilitia: Home mortgage 220 DOD Joint ENE interest rate p_a_ Creditcard 151300 Ann (13% interest pa] Car loan Scott I E1296 interest pa] 21] D00 Net profit from busins Ex p ected sala forvear Elan k interest Managed fund distribution: Franl:ed dividends Franl