All Topics / Legal & Accounting / Reinvesting capital gains from IP owned in a Trust instead of distributing them

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  • Profile photo of BJaminBJamin
    Participant
    @bjamin
    Join Date: 2012
    Post Count: 2
    June 2, 2013 - 3:50 am

    Hi,

    If IP held in a trust is sold, can the capital gain be used to reinvest within the trust? e.g. use it to purchase another IP within the trust. If so, what are the tax implications for doing this? Because the gain is not distributed to any beneficiaries does this mean that it is not taxed?

    Also, if money in a trust is not distributed at the end of financial year, how is it taxed?

    Thanks

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,213
    June 2, 2013 - 8:01 am

    Nope.

    Similar to if you sold a property that you owned and bought another still a taxable gain

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://www.Structuring.com.au
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au

    Profile photo of BJaminBJamin
    Participant
    @bjamin
    Join Date: 2012
    Post Count: 2
    June 3, 2013 - 9:02 pm

    Thanks Terry,

    So really, it would be best to distribute the funds amongst the beneficiaries which will legally allow you to pay the least tax overall, and then pool the money together again to purchase new IP?

    Is a trust taxed the same as an individual if funds are in there at end of financial year? i.e. same tax brackets according to the amount of taxable income the trust has made throughout the year?

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,213
    June 4, 2013 - 1:22 am
    BJamin wrote:
    Thanks Terry,

    So really, it would be best to distribute the funds amongst the beneficiaries which will legally allow you to pay the least tax overall, and then pool the money together again to purchase new IP?

    Is a trust taxed the same as an individual if funds are in there at end of financial year? i.e. same tax brackets according to the amount of taxable income the trust has made throughout the year?

    THat depends on the benenficiaries. Thwy can gift or loan their money back to thr trustee for further investing. Once a distribution is made it is their money.

    Trusts generally must distribute all income otherwise the trustee will be taxed on the income at the top marginal tax rate. Ie 47%

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://www.Structuring.com.au
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au

Viewing 4 posts - 1 through 4 (of 4 total)

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