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Tax Assignment Rentan Bester created a living trust. Mr Bester also donated certain assets to the trust that generate its income. Three trustees have been
Tax Assignment
Rentan Bester created a living trust. Mr Bester also donated certain assets to the trust that generate its income. Three trustees have been appointed who have the discretion to distribute the income of the trust as they see fit.
An extract of the trust deed is shown below:
TRANSFER OF PROPERTY The Settlor, Rentan Bester , hereby conveys transfers and assigns the Property to the Trustee to be held on trust on such terms as are set out in this Trust Deed. The Trustee hereby acknowledges receipt of the Property and consents to the terms of the Trust Deed and admits and acknowledges that they are holding the Property in trust on the terms as set out in this Trust Deed. The Trustees are also expressly authorised to receive further property in the future from the Settlor or from any other person and to add this new
property to the Trust Fund.
The Trustees may make distributions to Beneficiaries who are minors in the following ways: either a) payment to those minors directly, or, b) payment to their parents or guardians. The Trustees shall have absolute discretion over which manner to choose and either manner shall
be a valid discharge of their powers
DISTRIBUTION TO JACKY BESTER
DISTRIBUTIONS TO MINORS
Distributions to Beneficiary, Jacky Bester, shall be subject to her receiving her law degree at
the University of Cape Town
Schedule A
The Trust property (subject of the Trust) shall be the following:
Leased Property
Share investments, 50 000 shares in BidProp
Schedule B
The Trust Beneficiaries (objects of the Trust) shall be the following:
Beneficiary Percentage
1. Vicky Bester (Mr Rentans), 60%
2. Jacky Bester (24 years of age) and 30%
3. Piet Bester (8 years of age). 10%
You have been given the income and expenses of the trust during the year of assessment ended 28 February 2019:
N$
Income
Rental income of leased property
200 000
Dividends
60 000
Expenses
Bank Charges
5 000
Interest on mortgage over properties
25 000
Maintenance expenditure on leased out property
15 000
Other expenditure in production of income
7 500
207 500
Assume that Jacky has not yet finished his degree for the year of assessment ending 28 February 2019.
The trust only distributed 60% of the dividend income and 70% of the rental income to the beneficiaries during the year.
YOU ARE REQUIRED TO:
Calculate the taxable income of Vicky, Jacky, Piet and the Trust. (20 marks)
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