QUESTION 2

The Hickey Family trust, established under Australian law, has the following income for the year ended 30 June 2020:

• Australian sourced business income $100,000
• United States sourced business income $50,000
• Capital gain on property held for 5 years $60,000

Assume there are no allowable deductions for the year ended 30 June 2020.

The three beneficiaries of the trust are:

• Earl A 50 year old United States Resident who is not under a legal disability
• Randy Earls 48 year old brother who lives in Australia and is under a legal disability.
• Joy Earls ex-wife, a 40 year old Australian resident who is not under a legal disability and has a carried forward capital loss of $20,000

REQUIRED

B) What is the net income of the trust for the year ended 30 June 2020?

b) Advise the trustee of the most tax effective way to distribute the trust income for the year ended 30 June 2020.

Make sure you explain your answer.

You are not required to perform any calculations to answer this question.