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Fred Jones is a New Zealand resident.  He settles assets upon a trust for his three children, Tom, Lucy and Claire.  His wife, Georgina, brother Eric and lawyer, George Williams, who are all residents of New Zealand, administer the trust.  A family friend, Pamela Crow, provides free accounting services to the trust.  Thanks to Pamela, the trust has always kept its tax payments and returns up to date and accurate. The tax return was filed on 7 July 2019 for the year to 31 March 2019. The youngest child, Claire, turned 16 on 28 February 2019.

The beneficiaries received the following amounts from the beginning of the income year up until now:

The trustee’s intention is that Tom’s new car, Lucy’s university fees and Claire’s school fees are to be paid out of the trust’s accumulated assets. The rest of the distributions are to be paid out of current year income. The current year income of the trust is $75,600.

Questions

a) Identify the settlor or settlors of the trust. Give reasons.

b) Identify the trustees.

c) Identify the classification of the trust for tax purposes.

d) Calculate the beneficiary income for the year ended 31 March 2019. For clarity, all amounts paid out to beneficiaries are paid out of the trust’s current year income, unless identified otherwise in the facts.

e) Calculate trustee income for the year ended 31 March 2019.

f) Identify the distributions that are not beneficiary income. Give reasons.

Lucy Winn is a builder. Due to the inherent risks in building, Lucy opts to trade as a company, Lucy Winn Ltd, with herself as the sole shareholder and director.

Lucy Winn Limited’s statement of financial performance for the year to 31 March 2019 is as follows: