Part A

RTS Pty Ltd, a resident private company, was incorporated on 1 July 2018. From 1 July 2018 until 30 June 2020, it conducted a newsagency business. The company incurred the following trading losses for tax purposes:

$30,000year ended 30 June 2019, and

$40,000year ended 30 June 2020.

In July 2020, the company discontinued its newsagency business, restructured and acquired a family restaurant business. The companys shareholdings of ordinary shares at the close of each financial year were as follows:

Shareholders	2019	2020		2021
	$		$ $
A	200	200		200
B	200	200		200
C		600		600
D				800
	400		1000 1800

For the tax year ended 30 June 2021, the company reported taxable income of $70,000.

Required:

Discuss the tax implications of the above events for RTS Pty Ltd. for the year ended 30 June 2021, citing relevant legislation and showing all calculations.

(12 marks)

Part B

The Short (living) trust derived $60,000 of interest income and $27,000 in fully franked dividends during the income tax year 2020/21.

The net trust income was distributed accordingly to the following beneficiaries:

(a) $40,000, including the franked distribution, to Sally, who is aged 62 and a resident and has no other income, with

(b) the remaining amount distributed to Jack, a 42 year- old non-resident.

Required:

Calculate the s. 95 net income of the trust and the tax implications for Sally and Jack citing relevant legislation to support your answer.

(8 marks)

Total (12 +8= 20 marks)