Drew is an Australian resident taxpayer who is a qualified electrical engineer. He is employed by a large Australian public company, ElectricAir Ltd. Drew is paid a salary of $110,000 per year, and ElectricAir also pays the 9.5% compulsory superannuation contribution imposed on employers, into the superannuation fund chosen by Drew. On 1 July 2017, Drew enters into a salary sacrifice agreement with his employer. Under this agreement, Ben will $10,000 of his $110,000 salary, which his employer will contribute to his nominated superannuation fund.

ElectricAir pays Drews private health insurance at a cost of $2,500 per annum. ElectricAir also pays for an annual gym membership at a cost of $1,300 per annum and Drews annual membership fee to the Institute of Electrical Engineers, at a cost of $700 per annum. All of these costs were incurred by ElectricAir on 1 July 2017.

Drew incurred the following expenses in the year ended 30 June 2018:

• Donation to the Australian Red Cross (a deductible gift receipient): $500

• Train fares to and from work: $1,600

• Taxi fares to attend client meetings: $400. These costs were reimbursed by his employer.

• Mobile phone bills: $900. Drew estimates that 20% of his mobile phone usage is work

  related.

  Drew is also a beneficiary of a discretionary trust. For the 2017-18 year, the income for the trust available for distribution was $80,000. The net income of the trust for tax purposes was $90,000. On 28 June 2018, Drew is told by the trustee of the trust that he has been allocated/distributed $20,000 of the trusts income for the 2017-18 year. The remainder of the income is to be retained in the trust.

  You should assume all amounts listed in the above question are inclusive of GST (if GST is applicable).

Required:

1. Calculate Drew's taxable income for the year ended 30 June 2018. You should explain the reason for including or excluding the amounts referred to in the facts in the calculation of taxable income. 12 marks
2. What are the tax consequences to the trustee of retaining $60,000 (i.e. the trust income that was not distributed to Drew) in the trust? 2 marks
3. Calculate Electric Air's fringe benefits tax (FBT) liability for the FBT year ended 31 March 2018 showing the basis of your calculation. 6 marks