1 (25 marks) In 2019 Kate purchased an investment property in the Blue Mountains for $700,000. (Kate paid a 10% down payment and borrowed the balance of the purchase price from BigBank at market rates.) Kate also paid transfer (stamp) duty of $50,000 and legal fees of $2,000 in relation to the purchase. At the time of the purchase, the property was already rented out to tenants who continued to live in the property following the purchase. During the 2020/21 year of income, in relation to the property, Kate received rent of $40,000, and incurred the following expenses: council rates of $2,500, water rates of $500, insurance premiums of $1,000 , agent's fees of $7,000 and $40,000 interest on the loan. Kate also arranged to use the property herself as a holiday home for four (4) weeks during the year, as she enjoys bushwalking in the Blue Mountains. Kate is also a potential beneficiary of the Smith Family Trust (SFT), an Australian resident trust. The beneficiaries are Bob and his wife Bernice, and their two children, Kate (30 years) and Kim (25 years). Bob, Bernice, Kate and Kim are Australian residents for tax purposes. The trustee is a close