Susan Smith is the trustee of an Australian resident trust estate created by a Deed. She created the trust for the benefit of her unmarried daughters, Megan aged 19 years and Isabel aged 15 years. They are both residents of Australia. The following information indicates the trading activities of the trust for the 2019/20 income tax year. Receipts Net income from trading activities $80,000 Fully franked dividend received $25,000 Proceeds from shares in Hub Ltd on 12 June 2020 (was purchased in 2005 at a cost of $20,000) $60,000 Rental income $65,000 Expenses Interest paid on investment $40,000 Expenses incurred in generating rental income $15,000 Megan derived a salary of $7,000 while working casually at McDonalds. Isabel received interest income of $2,000 from her savings account. Required Advise Susan the taxation implications (tax payable by the trustee and/or each beneficiary) under each of the alternatives (a) and (b) below.

You must provide relevant cases and/or legislation. (a) Susan does not exercise any discretion as to the distribution of income during the year. (b) Susan distributes the trust net income to each beneficiary 50% each.