Question

Margaret Jones established the “Jones Family Trust” in 2000 with XYZ Pty Ltd as the corporate trustee. Margaret and her husband Dean are the directors of the trustee company. The trust holds a variety of investments in property and cash. The trust was established to protect investments as Dean is always concerned that he could be sued for negligence.

The trust records for the 2019-20 income tax year disclose the following:

Receipts ($)

95,000 Rent from investment properties

5,000   Interest from a bank account

Payments ($)

1,500   Accounting expenses for tax return

12,000 Repairs to investment properties

8,000   Interest on a loan for the investment property

2,000   Legal expenses incurred in defending a claim by a tenant

Margaret does not work. Dean is a senior tax manager and received a salary of $180,000 in 2019-20 income tax year.

They have three children:

•           a son, Paul, aged 22 years, a student at university who earned $10,000 for the year;

•           a daughter, Racheal, aged 18, also a university student who earned only $3,000 for the year; and

•           a second daughter, Kate, aged 14 years, a full time high school student with no other income.

Dean has his grandfather living with him and he had no income for the year. All family members are beneficiaries of the trust and Dean had also established a corporate beneficiary which was able to receive trust distributions.

Required:

Calculate the net income of the Jones Family Trust for the 2019-20 income tax year

Answer 1

Net income of the Jones Family trust for year 2019-2020
Receipts	Amount
Rent from Investment properties	9,500.00
Interest from bank account	5,000.00
Total of receipts	14,500.00
Payments
Accounting expenses for tax return	1,500.00
Repairs	12,000.00
Interest on loan	8,000.00
Legal expenses	2,000.00
Total of payments	23,500.00
Deficit (receipts -Payments)	-9,000.00
salary Incomes
dean Salary	180000
Paul salary	10,000.00
racheal salary	3,000.00
Total Salary	193000
Net Income of Jones Family Trust (Total Salary income -Deficit)	1,84,000.00