HDT and distibution of capital gain

[Cales405]

I have a Macquarie GS HDT and am a little confused in regards to the distribution of capital gains to beneficiaries due to changes.

I am the only special income unit holder and have been neg gearing and distributing all net income to myself at tax time.

With a sale of a property/s, will I still be able to distribute the cg at the trustees discretion (corporate, with my wife and i directors of trustee company)?

 

[Cales405]

Anyone????

 

[Peter_Tersteeg]

Hybrid trusts are a touchy subject at the moment. My gut feel is that you've treated the trust as a unit trust thus far and to be consistant you need to assign the capital gains in the same manner.

Your accountant may have a very different opinion and they're the ones who have to present it to the ATO. They're also much better informed about your tax circumstances than anyone here.

 

[agent007]

I have a Macquarie GS HDT and am a little confused in regards to the distribution of capital gains to beneficiaries due to changes.

I am the only special income unit holder and have been neg gearing and distributing all net income to myself at tax time.

With a sale of a property/s, will I still be able to distribute the cg at the trustees discretion (corporate, with my wife and i directors of trustee company)?

The question you are asking is exactly the main contention point the ATO is making about the HDT deeds that allow a unit holder to claim -ve gearing for himself but, distribute capital gains in a more "favorable" manner. I know the MGS had recommended a modification of their deed somehow to fix that issue but i don't know the details. I strongly suggest you speak to a good accountant that knows the issue before you start distributing capital gains. Otherwise, you may run into issues now or in the future.

 

[Mry]

I doubt any accountant is going to answer your question. The goal of HDTs was to give negative gearing benefits to one person and the resultant capital gains to others but as was said by others, that didn't work out. This is not a simple question so you really need to see your accountant and they may need to consult with MGS.

 

[Terryw]

I have a Macquarie GS HDT and am a little confused in regards to the distribution of capital gains to beneficiaries due to changes.

I am the only special income unit holder and have been neg gearing and distributing all net income to myself at tax time.

With a sale of a property/s, will I still be able to distribute the cg at the trustees discretion (corporate, with my wife and i directors of trustee company)?

This is a complex problem.

You will have to go by the wording of the deed as the first priority.

But if this is a non-commercial set up then you may have problems with deductions being claimable.

I would say, probably, the unit holder would have to have a fixed entitlement to the CG (in proportion to their unit holdings) to enable them to be able to have claimed the interest.

 

[Cales405]

Yes, it appears that I will have all the capital gain. My deeds were prepared prior the ATO ruling and have had no amendments since.

I think it is a good opportunity to wind down the trust as the costs to operate outweigh the benefits.