FNS60217: Advanced Diploma of Accounting - Accounting Assignment Help

Case 1: Discretionary Family Trust

Steve formed a Discretionary Family Trust some years ago in favour of his children. The children are:

• Gillian, aged 25, and married;
• Jeff, aged 23, certified insane and is confined to institution;
• Simon, aged 19, a university student;
• Louis, aged 16, s secondary student;
• Boris, aged 4.

The trust deed states that Gillian and Jeff are each entitled to 20% of the trust income.

Simon and Louie each have an entitlement to 25% of the trust income which is to be accumulated until they reach 21 years of age. Simon has a vested and indefeasible interest in his share, but Louise’s entitlement is contingent upon her surviving until age 21.

Bories does not have a fixed percentage entitlement, but the Trustee has discretionary power to make payments out of trust income for the benefits of Boris. The remaining of the income is retained to accumulate in the trust.

During the year the trustee exercise their discretionary authority and paid $7,000 medical expenses on Boris’s behalf.

The gross income of the trust was $123,000, and deductible expenditure relating to that income was $3,000.

Also, Simon derived $5,700 gross wages (PAYG withheld $800) during university vacations.

Required:

For the current year of income calculate the following:

1. s. 95 net trust income
2. The share applicable to each beneficiary
3. Tax Payable by each beneficiary and/or the trustee.