The Fast Family Trust is a non-revocable inter vivos discretionary trust settled several years ago by the Fast familys lawyer to operate sports car dealership in Glenelg, a suburb near Adelaide, South Australia. The trust is registered for the Goods and Services Tax (GST). The trustee of the Fast Family Trust is Fast Cars Pty Ltd which has two directors: Sarah and Trevor Fast. The beneficiaries of the Fast Family Trust include Sarah, Trevor, and their three children, Ashley, Frank, and John. The trustee has the power to distribute the net income as it thinks fit. For the year ended 30 June 2023, interim calculations revealed that the net income of the trust is $505,000 (GST exclusive), but this has not considered the tax consequences (if any) of the additional information provided below:

1. The business purchased branded caps with the logo of the dealership displayed prominently on the front for its sales staff in January 2023 at a cost of $1,500 (GST exclusive). These were purchased to be worn while staff were at the dealership, but they may be worn elsewhere if the staff member chooses. Sarah and Trevor thought that since the sales staff spent large amounts of time outdoors speaking to potential customers that the caps would help protect them from the sunshine. They would also be a good promotional tool if they were worn away from the dealership. Sarah and Trevor also wanted to support local business, so they negotiated with a local clothing manufacturer to supply the caps.

1. A salesperson had been careless when driving one of the dealerships cars and was caught speeding and fined $280 for going more than 10 km/h over the speed limit. The fine was paid in June 2023. State government fines are not taxable supplies.

Details of the beneficiaries and their income derived from outside the trust for the year ended 30 June 2023 is as follows:

Sarah is 42 years old and derived $5,679 from investments.

Trevor is 40 years old and derived $12,563 from investments.

Ashley is 19 years old and derived $47,300 from her employment as a manager at McDonalds.

Frank is 17 years old and works full time as an apprentice car mechanic deriving $32,670.

John is 15 years old and is a full-time student who derived $5,408 from his employment in a pizza shop.

None of the above beneficiaries have any income tax deductions. All are residents of Australia for tax purposes. Ignore the Small Business Entity Concessions. No beneficiary has entered into a re-imbursement arrangement of any kind with the trustee.

Required

Based on the information provided above:

(a) Calculate the net income of the trust for the year ended 30 June 2023. Justify your calculations and legal arguments using the cite, describe, apply approach.

(c) State (ie cite) the section of the Income Tax Assessment Act 1936 (Cth) which assesses the net income of the trust that you calculated in part (a) in accordance with your distribution. Note: no discussion of these sections is required, only citation.