If a trust holds assets, and those assets are sold, and the income from that sale is distributed to a trust beneficiary, is that income in the beneficiary's tax return seen as income from a captital gains event or just ordinary income ?
Hi @Rochus,
Our webpage 'Trust capital gains and losses' advises that if a beneficiary is absolutely entitled to a trust asset, then any actions related to the asset are considered to have been performed directly by the beneficiary. Therefore, if a CGT event occurs to the asset (such as disposal), then any capital gain or loss from the event will form part of the beneficiary's CGT liability for income tax purposes.
Where a beneficiary receives a distribution from a Trust's income (not relating to a CGT event), then this would be reported as income at item 13 of the supplementary tax return.
I hope this helps, and please see the below links for more information :)
ATO website- Trust income
ATO website- Trust capital gains and losses
ATO webpage- Trust distributions
ATO website- Tax Ruling 2004/D25: CGT & absolute entitlement
ATO website- Supplementary tax return instructions (item 13)
RachATO
Hi @Rochus,
Our webpage 'Trust capital gains and losses' advises that if a beneficiary is absolutely entitled to a trust asset, then any actions related to the asset are considered to have been performed directly by the beneficiary. Therefore, if a CGT event occurs to the asset (such as disposal), then any capital gain or loss from the event will form part of the beneficiary's CGT liability for income tax purposes.
Where a beneficiary receives a distribution from a Trust's income (not relating to a CGT event), then this would be reported as income at item 13 of the supplementary tax return.
I hope this helps, and please see the below links for more information :)
ATO website- Trust income
ATO website- Trust capital gains and losses
ATO webpage- Trust distributions
ATO website- Tax Ruling 2004/D25: CGT & absolute entitlement
ATO website- Supplementary tax return instructions (item 13)
RachATO
Thank you RachATO. Very helpful and much appreciated.
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