The Bell Family Trust (Bell Trust) was established by Mr. Bell for the purposes of the education and wellbeing of his family.

In the last financial year Emma (aged 37) as Trustee made distributions from the trust account to herself, John (aged 20) and Edward (aged 17) under her discretion as trustee.

Emma reports to you, her tax advisor, the following information:

Distributions

• Emma $145,000
• John $105,000
• Edward $80,000
• Retained in trust $10,000

Additional information:

• Emma works as a Social Media consultant and also had $150,000 in salary and $12,500 in work related expenses.
• John is a fulltime university student with no other income.
• Edward attends a private boarding school. $75,000 of his trust distribution pays his school fees.

Explain the tax obligations for Emma, John, Edward and the undistributed income retained in the trust account?

Ensure you refer to applicable legislation, case law and reasons in your answer.