Question 2:

During the year ended 30 June 2022, the trial balance of The McLeod Family Trust, a discretionary family trust, revealed the following:

$

Business income 65,000

Gross rental income 40,000

Unfranked dividends 7,500

Fully franked dividends Santos Ltd (taxed at 30%) 4,200

Business deductions 38,500

Rental property deductions 24,000

The trustee, Geoff McLeod, decided to distribute the net income of the trust to each the following beneficiaries as follows:

Melissa McLeod (wife of Geoff, living in Brisbane, aged 52) 50% distribution

Jessica McLeod (daughter, aged 21, full-time university student studying a 3-year Arts degree at Griffith University and living in Brisbane) 25% distribution

Max McLeod (son of Geoff and Melissa, living in Brisbane, aged 10, primary school student) 25% distribution

You may assume that all of the abovementioned beneficiaries are presently entitled. Furthermore, all beneficiaries are Australian residents for tax purposes.

For the year ended 30 June 2021, the trust made a tax loss of $6,000.

Required:

(a) Calculate the net income of the trust estate (or tax profit) for the year ended 30 June 2022.

Determine the amount to be included in the assessable income of each beneficiary (or trustee) for the year ended 30 June 2022.

Outline the income tax implications of the allocation of trust income for the 2022 income year (ie. who is responsible for paying the tax and the relevant tax rates). There is no need to calculate the tax payable of each beneficiary.