7.1 Terry, a USA tax resident for tax purposes since 1992, created a trust in New Zealand in 2018 and transferred his business assets and personal properties in the USA and other countries to the trust. The beneficiaries of the trust are Terrys wife and his two unmarried 16 year and 12-year-old daughters. Trustees of the trust are Auckland Turner and Associates. Required: (i) Describe the nature of this trust for New Zealand Tax purposes. (1 mark) (ii) Advise the trustee of their obligations to Inland Revenue on formation of the trust. (4 marks) (iii) What are the taxation implications and, in particular, the impact on trustees on failure to fulfill their obligations to Inland Revenue? (6 marks) 7.2 Ron, a NZ resident, set up a complying trust several years ago. The beneficiaries of the trust are Rons three grand-children who are at present at primary school. The trust deed provides that until beneficiaries start studying at college $1,000 must be distributed to each of the three beneficiaries of the trust as beneficiary income. During the year ended 31 March 2022, the trust received rental income of $4,000, dividend income of $600 and interest income of $100 and incurred repairs and maintenance expenditure of $1,200 and rates of $1,000. Required: (i) How much income is trustee income, and how much tax is payable on the trustee income for the year ended 31 March 2022? Explain your answer and show your calculation. (6 marks) (ii) How much income is beneficiary income, and how much tax is payable on the beneficiary income for the year ended 31 March 2022? Explain your answer and show your calculation. (2 marks)