Dunphy Investments Trust

Dunphy Investments Trust was settled by Jay Pritchett a family member in 2015 as an investment trust to benefit the members of the Dunphy Family.

Income and expenditure were as follows:

Income $

Dividends from Wardrobe Ltd franked to 100% (attached franking credits of $5,486) 12,800

Unfranked dividend from Closet Pty Ltd 8,400

Interest income on term deposit 9,654

Rental income 54,000

Expenditure

Rates and taxes on retail premises 2,386

Installing new partitioning in retail premises 6,800

Interest on money borrowed to purchase the retail premises. The loan was originally taken out in June 2019. The Trust paid interest of $1,875 in respect of the loan on the 1^st of each month. On 1 March 2020 the trust prepaid 12 months of interest totalling $22,500. 37,500

Legal costs associated with the preparation of the lease agreement 1,250

Additional information

The Dunphy Investment Trust owned retail premises which it rented out. The original tenants moved to a bigger space and the Trust secured new tenants in the current year. The new tenants paid a lease premium of $27,000.

The Trust sold shares in Closet Pty Ltd on 2 February 2020. Proceeds received from the sale was $61,000. The shares were acquired on 6 September 2010 for $22,300. It paid brokerage of $223 on purchase.

The Trust also sold shares in Walk-in-Robe Solutions Ltd on 31 May 2020. Proceeds received from the sale were $14,650. The shares were acquired on 1 August 2013 for $20,000. No brokerage was payable as they were acquired from a share float.

The trust income was distributed as follows:

• Luke (17) was made specifically entitled to all the franked dividend income and also received the unfranked dividends of $8,400.

Luke had left school in November 2019 and started working full-time in the local Gag and Joke Shop on 15 November 2019 and when he began studying magic studies at University in February 2020 he changed to only working part-time at the shop. His salary from his employer was $12,500 (PAYG withheld of $980). He also received interest of $1,900 from monies he invested from a legacy left to him from his grandmothers estate.

• Hayley (25) was made specifically entitled to 100% of the capital gain made by the trust. Hayley lived off her trust distributions and did not have any other source of income during the year. However, she did have a carried forward capital loss of $6,350 from previous income tax years.
• The Trustee exercised his discretion and paid $4,500 in respect of school fees for Lilly (12).
• The remaining income was to be accumulated in the Trust.

1. Calculate the net income and Division 6E income of the trust.

2. Calculate the taxable income (if any) of each Beneficiary and the net tax payable by each Beneficiary or the trustee. Explain and state the section numbers under which the Trust income will be assessed.

Answer must be done using Australian Tax law.