The Valley Trust is a discretionary trust (not a family trust) set up on 1 July 2014 that operates a building consulting business. For all relevant years, the trust has had the same trustee, VVT Pty Ltd.
John and Doris each hold one share in VVT Pty Ltd and no other shares have been issued to this date. No beneficiaries hold fixed interests in the trust.
The assessable income of the trust for the year ended 30 June 2018 is $220,000.
In the year ended 30 June 2016 the trust incurred a loss of $20,000 and for the year ended 30 June 2017 the trust incurred a loss of $30,000.
However, for the year ended 30 June 2015 the trust had a net income of $40,000. This net income was distributed to John- 30%; Doris-30%, Bob-20%, Gary-10% and Edward 10%. The only other beneficiary, Cathy, did not receive any distribution in that year. For the year ended 30 June 2018, the trustees propose to distribute a third of the trust net income to each of John, Doris and Cathy.
Required:Can the trust apply its losses for the years ended 30 June 2016 & 2017 respectively to reduce the trust net income for the year ended 30 June 2018?
Question 2
Amery Pty Ltd has a balance sheet as at 30 June 2018 which shows the following:
Assume that all assets are shown at their fair market values and the loan is secured only against the land.
Required: What amount of stamp duty would apply if Robert, who has no prior existing holding of shares in this company, acquires 60% of the issued shares in Amery Pty Ltd for their fair market value? Assume that the transaction takes place on 1 May 2018 and that the land is non-residential and non-primary production land.
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