CGT + capital losses in a Trust

Hi all ,
A question regarding CGT. If a trust was holding 20k in capital losses ie shares sold at a loss ,and then sold a property for a total profit after expenses of 50k that has been held for over a year ,which would be the right sums for income distribution.

A. Taxable CG on property - 50k x 50% = 25k
minus holding losses of 20k
distribute 5k

B Capital gain on property- 50k
minus holding losses of 20k
total Capital gain 30k
Capital gain 30k x 50%= 15k
distribute 15k

I would expect (A) but would like confirmation,thanks in advance
Regards Bushy
 
HI

I am afraid that the answer is B, not A.

Sorry

Dale

Originally posted by Bushy
Hi all ,
A question regarding CGT. If a trust was holding 20k in capital losses ie shares sold at a loss ,and then sold a property for a total profit after expenses of 50k that has been held for over a year ,which would be the right sums for income distribution.

A. Taxable CG on property - 50k x 50% = 25k
minus holding losses of 20k
distribute 5k

B Capital gain on property- 50k
minus holding losses of 20k
total Capital gain 30k
Capital gain 30k x 50%= 15k
distribute 15k

I would expect (A) but would like confirmation,thanks in advance
Regards Bushy
 
Thanks Dale,
Losses are definitely no good for trusts then. I wll have to put my thinking cap on again.
Cheers Bushy
 
Well you've lost me here. Isn't B the more favourable outcome? You get to distribute more money to the beneficiaries - isn't this good? How are losses not good within a trust? I am a lost puppy in the world of trusts!

Cheers
 
Stevo,
My understanding is if you have a capital loss in a personal investment it can be offset against your taxable income.If your investments are purchased through a Trust structure the losses can not be distributed ,only held indefinately to be offset against future capital gains.
In both cases A + B you actually have 30k of real cash in you hand 50k - 20k loss. The distribution is what gets distributed to family members which is then taxed at their respective tax rates.
Therefore it seems that the 50% rule for CGT is also a 50% rule for Capital losses when held in a trust.
I'm still learning as well so hopefully Dale will ok the above.It would be great if there was some way to transfer the losses that are held in the Trust to the highest income earner so that you had more income to distribute to the lower income members.
I am currently waiting for the posty ( I get my Trust Magic today) there might be something in there,Dale?
Regards Bushy
 
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