Hi guys
If I was to lend 1k to a discretionary trust, where it is invested in a growth asset for longer than 12 months before selling it for 2k and thus realising a 1k capital gain, would it be fair to say that 50% of the capital gain ($500) would be treated as income for the trust and must be either distributed or paid tax on, and the remaining 50% can either be distributed as capital or become part of the trust fund?
Is there any difference in how the same situation would apply to a unit trust?
Thanks,
CarlI think it would work like this:
Capital gain = $1000. This is distributed, if to an individual, then the person will get the 50% reduction in CGT, and this will become $500.
The remaining $1000 will be an asset of the trust, but it still has the $1000 loan, so it could pay this back, or keep the money, and pay the loan back later.
For a unit trust, the $1000 CG would have to be distributed to unit holders based on the percentage of ownership.
Terryw
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