The Smith Family Trust ran a retail furniture and electrical appliance business trading as 'Harry Smith'. The income and expenditure items in the accounts of the business for the year ended $30$ June CY were as follows:

Income $ Expenditure $

Cash sales $8,250,000$ Bank interest on overdraft $125,000$

Lease premium $100,000$ Debt collector $3,258$

Lease rental $200,000$ Insurance premiums $68,000$

Franked dividends $100,000$ Interest on loan $270,000$

Commission on finance $150,000$ Legal expenses regarding income tax appeal $3,000$

Legal expenses to defend an action by a customer for an injury sustained in the store $34,000$

Loan expenses $24,500$

Provision for doubtful debts $20,000$

Provision for long service leave $160,000$

Provision for sick leave $75,000$

Purchases of appliances $2,680,000$

Purchases of furniture $3,740,000$

Superannuation for $2$ managing director$$s $50,000$

Superannuation for staff $50,750$

Tax agent's fees $5,000$

Wages $825,000$

Workers' compensation insurance $40,000$

Notes to accounts

Of the cash sales received during the year $$1,100,000$ represented the payment for sales made in the previous year. At $30$ June CY invoices had been issued for sales of $$930,000$ for which no payment had been received.

Franking credits attached to the dividend are $$42,857.$

Stock on hand at $1$ July CY was $$1,450,000$ and at $30$ June was valued at:

Market value $$3,270,000$

Cost price $$1,630,000$

Replacement price $$1,890,000$

During the year the Trustee leased part of the business premises and was paid a lease premium of $$100,000.$ $$2,500$ was paid to a licensed valuer to provide a sworn valuation on the calculation of the premium.

The Trustee obtained a ten$-$year loan of $$1,200,000$ from a finance company to purchase stock and provide working capital for the business. The loan was approved on $1$ September of the current income year and interest was payable immediately, in equal monthly instalments, at $10\%$ pa on $1$st of each month. On $1$ June the Trustee prepaid interest in advance of $$180,000.$

The Trustee paid the following expenses on the loan:

Procuration fee $$12,000$

Stamp duty $$10,000$

Valuation fee $$2,500$

Cheques from customers for sales of $$44,000($included in cash sales$)$ were dishonoured during the year. $$33,000$ was subsequently received but the balance was never recovered because the customers' whereabouts could not be traced.

Revenue losses carried forward from the previous income year amounted to $$642,220.$

Distribution:

All dividend income and capital gains are to be distributed to Nancy Smith who was $55$ years old. Nancy also had the following income.

$$ dividend of $$50,000$ with attached franking credits of $$10,714.$

$$ dividend of $$75,000$ with attached franking credits of $$19,286.$

$$ capital losses from the previous year of $$110,000.$

$$30,000$ to Norman Smith aged $15$ years, son of Harry Smith. Norman also received income of $$22,400$ from his uncle's deceased estate, wages of $$10,000$ from working part$-$time in the business and interest from the investment of his wages of $$500.$

$$30,000$ to Noami Smith aged $17$ years, daughter of Harry Smith. Noami was working full$-$time in the business for the whole year and was paid a salary of $$20,000.$

$$25,000$ to Norma Jones aged $25$ years, niece of Harry Smith. Norma also derived interest of $$8,000.$

$$10,000$ to be accumulated for Nathan Jones aged $16$ years, orphaned nephew of Harry Smith, until he reached $18$ years of age. In the event of his death the accumulated funds revert to Norma Jones. The trustee also spent $$7,000$ on his education during the year.

Any remaining income was to be retained in the trust for further use in the business.

Required

a$)$ Calculate the net income of the trust assuming the Trustee wished to minimise the net income of the trust.

b$)$ Calculate the taxable income and net tax payable by all the beneficiaries and$/$or the Trustee.