Statement of Advice 2 - Advice on Trust income and distributions

Your client Jimmy Wong has attended your office to have his 2022-year tax return prepared. Jimmy is the trustee of an Australian resident trust estate created by a Trust Deed. He created the trust for the benefit of his sons, Rex aged 18 years and Chris aged 15 years. They are both residents of Australia.

The following information indicates the trading activities of the trust for the 2021/22 income tax year.

Receipts

Rental income from various investment $88,000 Fully franked dividend received $5,000

Expenses

Expenses incurred in generating rental income $37,000

Other information

Rex is a full-time university student and earned $3,000 working casually at various bookshop. He also received a job seeker payment of $2,400 from Centrelink during 2021/22 tax year. Chris is a full-time high school student and earned $2,000 working at Flower Power during school holidays.

Required

Advise Jimmy the taxation implications (base tax payable by the trustee and/or each beneficiary) if he distributes the trust net income to each beneficiary at 50% each. Do not need to include Medicare levy or any tax offsets.