Shawn Parker passed away in 2016, resulting in the formation of the Parker Trust in South...

  

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Shawn Parker passed away in 2016, resulting in the formation of the Parker Trust in South Africa. The trust has 2 beneficiaries, namely Nikki and Kyle Parker, the children of Shawn and Maria Parker. All members of the family are South African residents. At 28 February 2021, their ages were as follows: Nikki: 23 years old Kyle: 15 years old Maria: 51 years old ● . ● The trust has 3 assets: Cash in a South African bank account, which was bequeathed to the trust upon Shawn's death. Cash in a foreign bank account, which was bequeathed to the trust upon Shawn's death. . . ● A South African property, which was previously owned by Maria, who donated it to the trust in 2018. Three independent trustees manage the trust on behalf of the beneficiaries. The trust deed specifies that any distribution should be pro rata out of all the receipts and accruals of the trust. The following information in respect of the 2021 year of assessment relates to the trust: Taxable rental income Local interest earned Foreign interest earned Less: Trustees' remuneration paid from the R800 000 net income Distributed to Nikki Distributed to Kyle Retained (current year) ANNEXURE F: FORMATIVE ASSESSMENT 1 500 000 200 000 100 000 800 000 (40 000) (120 000) (80 000) 560 000 The deed provides that the remaining annual income is to be accumulated for the beneficiaries, who will be entitled to receive it when the beneficiaries reach the age of 30. If a beneficiary should die before attaining the age of 30, the other beneficiary will be entitled to that amount. Required: 1.1. Prepare a breakdown of the trustees' remuneration, distributions and retained earnings attributable to the various sources of income for the trust. 1.2. (5 marks) Calculate the total taxable income for each party (including the trust) during the 2021 year of assessment. Provide a clear indication of whether the person/trust is liable for tax on the rental income, local interest and foreign interest, along with a brief explanation. (21 marks) Shawn Parker passed away in 2016, resulting in the formation of the Parker Trust in South Africa. The trust has 2 beneficiaries, namely Nikki and Kyle Parker, the children of Shawn and Maria Parker. All members of the family are South African residents. At 28 February 2021, their ages were as follows: Nikki: 23 years old Kyle: 15 years old Maria: 51 years old ● . ● The trust has 3 assets: Cash in a South African bank account, which was bequeathed to the trust upon Shawn's death. Cash in a foreign bank account, which was bequeathed to the trust upon Shawn's death. . . ● A South African property, which was previously owned by Maria, who donated it to the trust in 2018. Three independent trustees manage the trust on behalf of the beneficiaries. The trust deed specifies that any distribution should be pro rata out of all the receipts and accruals of the trust. The following information in respect of the 2021 year of assessment relates to the trust: Taxable rental income Local interest earned Foreign interest earned Less: Trustees' remuneration paid from the R800 000 net income Distributed to Nikki Distributed to Kyle Retained (current year) ANNEXURE F: FORMATIVE ASSESSMENT 1 500 000 200 000 100 000 800 000 (40 000) (120 000) (80 000) 560 000 The deed provides that the remaining annual income is to be accumulated for the beneficiaries, who will be entitled to receive it when the beneficiaries reach the age of 30. If a beneficiary should die before attaining the age of 30, the other beneficiary will be entitled to that amount. Required: 1.1. Prepare a breakdown of the trustees' remuneration, distributions and retained earnings attributable to the various sources of income for the trust. 1.2. (5 marks) Calculate the total taxable income for each party (including the trust) during the 2021 year of assessment. Provide a clear indication of whether the person/trust is liable for tax on the rental income, local interest and foreign interest, along with a brief explanation. (21 marks)

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