Part A The Colby Family Trust, a discretionary trust, was established some 15-years ago by Jacob Colby (father of Colin Colby). Jacob established the trust 2-years before his death. The potential beneficiaries (objects) of the trust listed in the trust deed are Colin, his wife, Susie, and their three-children, Ethan aged 23, Ellie aged 21 and Margaret aged 19. The trustee is Colby Pty Ltd, a company in which Colin and Susie own one $1 share each. Colin and Susie are the directors of the company.d The trust deed contained the usual clauses that apply to most discretionary trusts, including the clause that gives the trustee absolute discretion in allocating the trust's income to beneficiaries (clause 6(d)). The trust has three rental properties (apartments). The income statement (P & L) for the financial year ending 30 June 2019 is as follows: Revenue (Receipts) Rent Interest (from bank) $128,000 $4,000 $132,000e Expenses Interest (1) $48,000 $5,000 $1,000 $8,000 Agent Management Fees Fine (2) Depreciation of Assets (3) Profit Notes $62,000 70,000 1. The interest was on money borrowed to purchase the properties.e 2. the trustee was fined for failing to ensure tenants put materials that can be recycled in the council recycling bin (instead of the rubbish bin (goes to landfill). 3. These were assets inside, or which formed part of the apartments. The income tax law depreciation on these items for the year was only $4,000. On 28 June 2019, the trustee (in exercising its power to allocate income) resolves to allocate the trust's income for the exclusive benefit of the beneficiaries as follows: Beneficiar Colin Elliee Ethan Income Allocation 40% of income. 30% of income. 20% of income. el None of the allocated "amounts" above had been paid or distributed to beneficiaries by 30 June 2019. As per previous years, the trustee sent all beneficiaries an email advising them of their income allocation for the year. This was done, as per previous years, in the first week of August (2019 in this case). el Requirede Fully advise all relevant parties on the income tax implications of the above (There is no need to calculate liability to the ATO for beneficiaries). Explain your advice by reference to tax legislation and tax principles Calculat el Part Be tions must be shown where required. Assume the fact in Part A, but change one fact, namely, the income tax law depreciation was S12,000. el Advise Ellie on her assessable income inclusion (if any) from the above. Explain your advice by reference to tax legislation and tax principles. Calculations must be shown where required. Part A The Colby Family Trust, a discretionary trust, was established some 15-years ago by Jacob Colby (father of Colin Colby). Jacob established the trust 2-years before his death. The potential beneficiaries (objects) of the trust listed in the trust deed are Colin, his wife, Susie, and their three-children, Ethan aged 23, Ellie aged 21 and Margaret aged 19. The trustee is Colby Pty Ltd, a company in which Colin and Susie own one $1 share each. Colin and Susie are the directors of the company.d The trust deed contained the usual clauses that apply to most discretionary trusts, including the clause that gives the trustee absolute discretion in allocating the trust's income to beneficiaries (clause 6(d)). The trust has three rental properties (apartments). The income statement (P & L) for the financial year ending 30 June 2019 is as follows: Revenue (Receipts) Rent Interest (from bank) $128,000 $4,000 $132,000e Expenses Interest (1) $48,000 $5,000 $1,000 $8,000 Agent Management Fees Fine (2) Depreciation of Assets (3) Profit Notes $62,000 70,000 1. The interest was on money borrowed to purchase the properties.e 2. the trustee was fined for failing to ensure tenants put materials that can be recycled in the council recycling bin (instead of the rubbish bin (goes to landfill). 3. These were assets inside, or which formed part of the apartments. The income tax law depreciation on these items for the year was only $4,000. On 28 June 2019, the trustee (in exercising its power to allocate income) resolves to allocate the trust's income for the exclusive benefit of the beneficiaries as follows: Beneficiar Colin Elliee Ethan Income Allocation 40% of income. 30% of income. 20% of income. el None of the allocated "amounts" above had been paid or distributed to beneficiaries by 30 June 2019. As per previous years, the trustee sent all beneficiaries an email advising them of their income allocation for the year. This was done, as per previous years, in the first week of August (2019 in this case). el Requirede Fully advise all relevant parties on the income tax implications of the above (There is no need to calculate liability to the ATO for beneficiaries). Explain your advice by reference to tax legislation and tax principles Calculat el Part Be tions must be shown where required. Assume the fact in Part A, but change one fact, namely, the income tax law depreciation was S12,000. el Advise Ellie on her assessable income inclusion (if any) from the above. Explain your advice by reference to tax legislation and tax principles. Calculations must be shown where required
