The Fancy Mask Family Trust is involved in the retailing of fancy and outrageous face masks as well as investing in the share market.

The beneficiaries of the trust are the nephews and nieces (listed below) of John Smith who is also the trustee of the trust.

During the year the trust derived the following:

$

Net profit from trading 300,000

Dividends from shares 50,000

Franking credits attached to the dividends 21,429

Interest on monies invested 2,195

Capital gain on the sale of an asset owned by the trust

After applying the 50% discount 95,875

Before applying the 50% discount 191,750

At the annual meeting the trustee decided to make the following distributions:

1. 15% of the trading income and interest to Jane Doe who is 12 years old. Janes beneficiary account is to go to her estate should she die before attaining the age of 18.

2. 10% of the trading income and all the dividend income to John Doe who is 17 years old.

John had left school in December 2019 and had started working full time in February 2020. John was working as a chemist assistant whilst studying for his medical degree at the local University on a part-time basis. His salary from his employer was $18,000 (PAYG withheld of $5,460). He also received interest of $1,500 from monies he invested from a legacy left to him from his fathers estate.

3 Missy Smith who is 25 years old was to receive 100% of the capital gain made by the trust. Missy lived off her trust distributions and did not have any other source of income during the year. However she did have a carried forward capital loss of $25,912 from previous income tax years.

The balance of the income was retained in the trust for investment purposes.

Required:

1. Calculate the net income of the trust, the Division 6E net income of the trust, and set out income excluded from the Division 6E net income.

2. Calculate the taxable income (if any) of each beneficiary and the net tax payable by each beneficiary or the trustee. Explain and state the section numbers under which the Trust income will be assessed.

QUESTION IS BASED ON AUSTRALIAN TAX LAW