Question 4

On 1 July 2020 Brian Beecham set up a discretionary trust to care for his wife Anne and their two children, Charles and Emily. He established a private company, Beecham Investments Pty Ltd, to act as trustee and transferred his ownership of rental properties and shares into the trust. The trustee provides you with the following information about the beneficiaries for the 2022 income year:

• Brian's wife, Anne is 40 years old and has no other income.

• Charles is 19 years old and is a full-time student at UTAS.

• Emily is 15 years old and attends high school as a full-time student.

During the 2021-22 tax year, the receipts and payments for the trust are as follows:

Receipts

Fully franked dividends from companies listed on the ASX: $140,000 (excl. franking credit)

Interest Income            $220,000

Payments Fees to financial advisers $ 10,000

The trustee distributed the net income equally between the three beneficiaries but retained $20,000 in the trust for future investment.

Required:

Showing ALL your calculations and referring to ALL relevant sections in the Income Tax Assessment Act 1936, calculate the s 95 net income of the trust estate. Explain how the trustee and each beneficiary will be assessed on their share of that net income.