On 8 May 2011 Wiley Coyote established a family trust, The Coyote Trust, which operates a callcentre, Beep Beep, that he had set up separately from…

On 8 May 2011 Wiley Coyote established a family trust, The Coyote Trust, which operates a callcentre, Beep Beep, that he had set up separately from his mobile telephone dealership. The trustdeed has a discretionary clause and it provides that the net income of the trust is to be distributedas follows: 35 % to the nominated bank account of Wiley; 15% to the nominated bank account of Wiley’s daughter Abby who is aged 21 and a fulltimestudent at university; 15% to the nominated bank account of Wiley’s son Sandy who is aged 17 and employedfulltime in the call centre; 15% to the nominated bank account of Wiley’s second son Jack who is aged 14 and afulltime school student; 5% to the nominated bank account of the registered charity The Society for the Preventionof Cruelty to Roadrunners; 5% to be placed into a bank account nominated by Wiley to meet the future medical andupkeep costs incurred on behalf of Wiley’s cat Lambchops; 5% to be retained by the trustee and held on behalf of any future grandchildren; and the remaining 5% to be distributed to any of the beneficiaries at the trustee’s discretion.In the year 2015/16 the following transactions were recorded in the trust’s books of account.Required:Providing full explanation, determine the trust income and its distribution showing the sections ofITAA 1936 that would apply to each amount distributed. Note that the remaining 5% was notdistributed by the trustee in accordance with the discretion available.Receipts $Gross fees 545,000PaymentsWages paid to Sandy 30,000Salaries paid to casual staff 50,000Deductible overheads 145,000Gift to Desert Views (a DGR) 5,000

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