I have just been reading a report on Trusts in Structuring prepared by a solicitor.
According to the report trusts are not entitled to the 50% discounted CGT concession that applies to an individual.
Can anyone confirm this the case ??
Thanks
KPHi kp,
The report is correct. The 12 month CGT concession is not available for trusts, but rather only what the ATO calls “natural persons” ie individuals.
Jay
EDIT: My apologies kp, I didnt read the question properly and was mixing up your issue with another [angry2]. Here is the relevant info:
What is the CGT discount?
You may be eligible for a CGT discount if:you are an individual, a trust or a complying superannuation fund
a CGT event happens in relation to an asset that you own
the CGT event happens after 11.45 am on 21 September 1999
you acquired the asset at least 12 months before the CGT event, and
you (or others) have not chosen to use the indexation method.
If all of the above apply, you can reduce the capital gain that you have made (after subtracting any capital losses) by the discount percentage that applies to you. The discount percentage for individuals and trusts is 50%, while the percentage for complying superannuation funds is 33 1/3%.My apologies for pointing you in the wrong direction
Jay
Thanks Jay,
So the next question is …why put your investments or “property for sale” in a trust apart from providing flexibility to distribute to minimise tax (except for CGT)since it doesn’t qualify for the 50% concession ?
Other way round, how do you take adantage of the CGT concession, apart from having the property in your own name ??KP
I think if a trust has a company as trustee the company is eligble for the concession
Thanks Jay, WF,
Have downloaded the CGT section from the ATO.
Will read relevant section.
I think this report may not be accurate…(got it from a link in the Trust Magic book.
taxlegal.com.au, searhed for hybrid trusts)KP
Originally posted by kp:why put your investments or “property for sale” in a trust apart from providing flexibility to distribute to minimise tax (except for CGT)since it doesn’t qualify for the 50% concession ?
By my understanding, profit and capital gain should not be retained in a trust (unless you want to pay tax at the top marginal rate), so should be distributed to the beneficiaries each year. The 50% CGT discount then passes through to the beneficiary. If the beneficiary is an individual, he/she gets to use it, but if it is a company, it doesn’t.
So I think the only time you don’t get the 50% discount is if the gain passes to or through a company, or the asset hasn’t been held for at least 12 months.
The other main reason for holding property in a trust is for asset protection, especially if the individual operates a business or other risky activity.
Note that I am not an accountant and this is only my understanding. It is only intended as comment, not advice.
GP
Yep,
I think thats the answer GP,
The CGT concession flows through to the beneficiary when you distribute the capital gain, and they claim the 50% concession
Thanks again,KP
Originally posted by WallFlower:I think if a trust has a company as trustee the company is eligble for the concession
I don’t think so. Only beneficiaries receive distributions from a trust, not the trustee, and companies are not entitled to the 50% discount. Capital gain is taxed at 30% just the same as other income.
Note however that I am not an accountant and this is just my understanding.
GP
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