Question 1
This question is related to topics specifically discussed in week 9.
The Sutherland Family Trust (a discretionary trust) has derived the following income during the 2017 income year:
$14,000 fully franked dividend received from Australian listed companies
$30,000 capital gain from sale of shares in Australian listed companies
$15,000 interest on money deposited in an Australian bank account
$15,000 interest on money deposited in a US bank account Assume that the trust has the following beneficiaries:
Alice (resident) aged 50 with wage income of $200,000, deduction of 20,000 and capital loss of $35,000;
John (foreign resident) aged 19, no Australian assessable income and lives in the UK; Carmen (resident) aged 17 with a fulltime job and $36,000 annual income;
Tom (resident) aged 2, no income;
Mike (resident) aged 15, a full time student in local school with no other income.
Advise the trustee of the Family Trust how to distribute the net income of the trust for the year ended 2017 so as to minimise the income tax payable by all the parties.
Question 2
This question is related to topics specifically discussed in week 7 - 9.
Kevin and Ian are in a partnership as retailers of electrical goods. The partnership records, exclusive of GST, for the financial year ending 30 June 2017 disclose:
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Receipts ($):
Gross receipts from trading
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500,000
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and additional receipt for bad debts recovered
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10,000
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Payments ($):
Purchases of trading stocks
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100,000
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Partners' salaries (each)
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50,000
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Interest
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10,000
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(on cash advanced for working capital made to the partnership by Kevin)
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Salaries (for employees and rent paid)
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60,000
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Legal expenses (in recovering bad debts)
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10,000
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Other details:
Kevin and Ian share partnership profits equally Trading stock on hand 1 July 2016: $10,000 Trading stock on hand 30 June 2017: $20,000 Kevin's personal records disclose:
Gambling winnings: $2,000 Fully franked dividends: $7,000
Net salary as a part-time instructor (excluding PAYG tax instalments of $2,000): $5,000 Subscription to professional journals: $500
Kevin and his family members are members of a private hospital fund
Demonstrate the calculation process for determining Kevin's tax liability for the year ended 30 June 2017, and explain your treatment of each item in this question.