Tom O'Loughlin is the trustee of a discretionary trust estate created on the death of Phil...

 

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Tom O'Loughlin is the trustee of a discretionary trust estate created on the death of Phil Merritt. The Deed names the following members of the Merritt family as beneficiaries of the trust: Zoe Merritt, aged 16 Andy Merritt, aged 20 Susie Merritt, aged 45 You have been provided with the following information in relation to the trust for the year ended 30 June 2019: Receipts Rental income 53,000 3,500 Interest Income Unfranked dividends Fully franked dividends Overseas dividends (foreign tax paid $150) 15,000 8,600 850 Other investment income 14,850 Outgoings Expenses incurred in earning rent Interest paid on money borrowed to invest 7,800 500 Additional Information: Other income of beneficiaries: Zoe Merritt Andy Merritt Susie Merritt $2,000 interest derived from government bonds which had been given to her $2,100 wages derived from fruit picking while he was on holiday in the Hunter Valley. Nil Required: Calculate and explain the net income of the trust estate. • If the trustee decides to distribute 25% of the trust income to each of the beneficiaries, explain the tax liability of Zoe, Andy and Susie (taking into account all information you have been given). • How is the 25% of net income of the trust that is not distributed to any of the beneficiaries treated? • If Andy was living in Tokyo, how would this affect your answer? IMPORTANT: You must provide reasons that explain and support your answer. Failure to provide reasonable explanations will result in very low marks. Tom O'Loughlin is the trustee of a discretionary trust estate created on the death of Phil Merritt. The Deed names the following members of the Merritt family as beneficiaries of the trust: Zoe Merritt, aged 16 Andy Merritt, aged 20 Susie Merritt, aged 45 You have been provided with the following information in relation to the trust for the year ended 30 June 2019: Receipts Rental income 53,000 3,500 Interest Income Unfranked dividends Fully franked dividends Overseas dividends (foreign tax paid $150) 15,000 8,600 850 Other investment income 14,850 Outgoings Expenses incurred in earning rent Interest paid on money borrowed to invest 7,800 500 Additional Information: Other income of beneficiaries: Zoe Merritt Andy Merritt Susie Merritt $2,000 interest derived from government bonds which had been given to her $2,100 wages derived from fruit picking while he was on holiday in the Hunter Valley. Nil Required: Calculate and explain the net income of the trust estate. • If the trustee decides to distribute 25% of the trust income to each of the beneficiaries, explain the tax liability of Zoe, Andy and Susie (taking into account all information you have been given). • How is the 25% of net income of the trust that is not distributed to any of the beneficiaries treated? • If Andy was living in Tokyo, how would this affect your answer? IMPORTANT: You must provide reasons that explain and support your answer. Failure to provide reasonable explanations will result in very low marks.