Henry (an Australian resident for tax) is 16 years old, and he is the sole beneficiary of the Herald Trust (‘the Trust’). Tania is the trustee of the Trust. In 2020/21, the net trust income of the Trust was $60,000 (this amount includes a net capital gain of $10,000 to which the trustee has applied the 50% CGT discount). Henry is presently entitled to 70% of the net trust income of the Trust.

For the 2020/21 tax year Henry’s total income from employment was $14,000. He also has a carried forward capital loss of $700 from the sale of company shares in the previous tax year. On 22 July 2020, Henry donated $500 to the Salvation Army (this organisation is a deductible gift recipient).

1. With reference to relevant law, briefly explain how the net income of the trust to which Henry is presently entitled will be taxed.

2. Calculate the tax payable/refundable for Henry, and for Tania (who has no other income or deductions). Include in your answer the section(s) under which the taxpayers are assessed.

Answer rating: 100% (QA)

Step 1 Tax means the fixed charge imposed by the government on the income for the betterment and wel... View the full answer