Calculate the net income of the nadine family trust

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Reference no: EM133608070

Problem

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.

Address the following and provide justification for your answer using legislation and case law: Calculate the net income of the Nadine Family Trust for this income year. Advise Nadine as to how she can distribute the net income in the most tax-effective way.

Reference no: EM133608070

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