Question 3 (20 marks)

The Galea Family Trust is a discretionary family trust with two adult resident beneficiaries, Jimmy and Lorraine. During the 2021 income year, the activities of the trust gave rise to the following:

Loss from rental property	$(6,000)
Interest income from term deposits	$4,000
Payments received from fully franked dividends	$14,000

The trustee of the trust resolved to distribute 80% of the trust income to Lorraine.

Lorraine has the following income/expenses for the 2021 financial year:

Gross salary (Includes $110,000 of PAYG tax withheld)	$250,000
Fully franked dividend*	$290
Tax agent fees for preparing income tax return	$(2,000)

* the dividend comes from Lorraines own share holdings, and not those of the trust.

Required: With reference to the facts above:

1. Calculate the net income of the trust (5 marks)
2. Calculate the taxable income and tax payable for Lorraine (10 marks)
3. Calculate the taxable income and tax payable for the trustee (5 marks)