Nadine established the “Nadine Family Trust” in 1990 with ABC Pty Ltd as the corporate trustee. Nadineand her husband Brad are the directors of the trustee company. The trust holds a variety of investments inproperty and cash. The trust was established to protect the investments as Nadine is always concernedthat she could be sued for negligence.The trust records for this income year disclose the following:Receipts ($)60,000 Rent from investment properties6,000 Interest from a bank account3,000 Unfranked dividendPayments ($)4,000 Accounting expenses for tax return5,000 Repairs to investment properties14,000 Interest on a loan for the investment property1,000 Legal expenses incurred in defending a claim by a tenantBrad works as an engineer and earned $90,000 in this income year. Nadine is a senior lawyer and receiveda salary of $180,000 in this income year. Nadine and Brad are married. They have three children:• a son, John, aged 21 years, a student at university who earned $6,000 for the year;• a daughter, Kim, aged 19, also a university student who earned only $2,000 for the year; and• a second daughter, Amy, aged 16 years, a full time high school student with no other income.All family members are beneficiaries of the trust. Nadine also established a corporate beneficiary, and thecorporate beneficiary is available to receive trust distributions. REQUIRED: Address the following and provide justification for your answer using legislation and case law: a) Calculate the net income of the Nadine Family Trust for this income year b) Advise Nadine as to how she can distribute the net income in the most tax-effective way.
Nadine established the “Nadine Family Trust” in 1990 with ABC Pty Ltd as the corporate trustee. Nadine
and her husband Brad are the directors of the trustee company. The trust holds a variety of investments in
property and cash. The trust was established to protect the investments as Nadine is always concerned
that she could be sued for negligence.
The trust records for this income year disclose the following:
Receipts ($)
60,000 Rent from investment properties
6,000 Interest from a bank account
3,000 Unfranked dividend
Payments ($)
4,000 Accounting expenses for tax return
5,000 Repairs to investment properties
14,000 Interest on a loan for the investment property
1,000 Legal expenses incurred in defending a claim by a tenant
Brad works as an engineer and earned $90,000 in this income year. Nadine is a senior lawyer and received
a salary of $180,000 in this income year. Nadine and Brad are married. They have three children:
• a son, John, aged 21 years, a student at university who earned $6,000 for the year;
• a daughter, Kim, aged 19, also a university student who earned only $2,000 for the year; and
• a second daughter, Amy, aged 16 years, a full time high school student with no other income.
All family members are beneficiaries of the trust. Nadine also established a corporate beneficiary, and the
corporate beneficiary is available to receive trust distributions.
REQUIRED:
Address the following and provide justification for your answer using legislation and case law:
a) Calculate the net income of the Nadine Family Trust for this income year
b) Advise Nadine as to how she can distribute the net income in the most tax-effective way.
Trending now
This is a popular solution!
Step by step
Solved in 3 steps with 1 images
