Question 1: Hadrian Trust is a resident discretionary inter-vivos trust carrying on retail trading

activities.

During the 2014/2015 income year the trust made a loss of $10,000 calculated in

accordance with s 95(1) ITAA 1936.

Hadrian Trust has performed better in 2015/2016, with income of Hadrian Trust

comprising:

1. Profit from the business activities = $55,000
2. Interest on term deposit = $5,000
3. Fully franked dividend (with imputation credit of $3,000) = $7,000

During the 2015/2016 income year, tax deductible business expenses of $9,000

were incurred.

The trustee has exercised discretion to make the following payments to beneficiaries

who all have a vested interest in the income of the trust:

1. Jillian, aged 68, who suffers dementia and is unable to give discharge to a legal contract = 25% of trust net income
2. Dimitri, aged 63 = 25% of trust net income
3. Viktor, aged 22 = 10% of trust net income
4. Yvette, aged 12 = 15% of trust net income which is to be accumulated indefeasibly and paid at age 21. In the event of her death Yvette's share will be paid toher estate.

Any remaining income is to be retained in the trust for re-investment purposes.

Required:

(a) Calculate the s 95(1) trust net income for 2015/2016.

(b) Explain how the trust net income will be assessed in the 2015/2016 income

year, making reference to whether assessment will be to the trustee and/or

beneficiaries.

You should make reference to appropriate provisions of the ITAA36.

Question 1: Hadrian Trust is a resident discretionary inter-vivos trust carrying on retail trading activities. During the 2014/2015 income year the trust made a loss of $10,000 calculated in accordance with s 95(1) ITAA 1936. Hadrian Trust has performed better in 2015/2016, with income of Hadrian Trust comprising: $55,000 Profit from the business activities Interest on term deposit $5,000 Fully franked dividend (with imputation credit of $3,000) $7,000 During the 2015/2016 income year, tax deductible business expenses of $9,000 were incurred. The trustee has exercised discretion to make the following payments to beneficiaries who all have a vested interest in the income of the trust: Jillian, aged 68, who suffers dementia and 25% of trust net income is unable to give discharge to a legal contract Dimitri, aged 63 25% of trust net income Viktor, aged 22 10% of trust net income Yvette, aged 12 15% of trust net income which is to be accumulated indefeasibly and paid at age 21. In the event of her death Yvette's share will be paid to her estate. Any remaining income is to be retained in the trust for re-investment purposes. Required: (a) Calculate the s 95(1) trust net income for 2015/2016. (b) Explain how the trust net income will be assessed in the 2015/2016 income year, making reference to whether assessment will be to the trustee and/or beneficiaries. You should make reference to appropriate provisions of the ITAA36