I have a couple of family trust questions. Which I will use scenarios to explain/ask.
1) I have a trust that has a carry over loss of $20, the trust sells a property (held for longer than 1 year) for $200 capital gain (so $100 for CGT),
a) Can the gain from one property be distributed to multiple people ( I think I am getting confused about streaming of income)
b) Does the trust distribute the $100 gain or does it take the $20 loss from the 200 and then distribute $90, or take the $20 loss from the $100 and distribute $80 ?
2) I thought there was some ruling that a capital loss can only be offset by a capital gain. I assume this is true ? and true for a trust as well.
3) As the trustee buys the asset in there name why is there no CGT event if I sack the trustee and make a new trustee. (I assume I need to "rename" the assets? Or is it joe buys it, but the "ownership papers" are in the name of the trust ?
4) why don't you want a trading P/L company as your trustee ( I thought the idea was that if the trustee was sued you just sack them)
MattFletcherTaxMember@fletchertaxJoin Date: 2009Post Count: 31
Regarding the trusts' carrying forward loss – is it a carrying forward tax or capital loss? You can only claim the capital gain against a capital loss but not against the tax loss.
In regard to calculations – have a look at the following link (also includes talk about applying concessions):
Fletcher Tax Accountants
http://www.fletchertaxaccountants.com.auPlease note comments made should NOT be taken as specific taxation, financial, legal or investment advice. Please seek professional, specific advice.
thanks for that, I was going for tax losses, (e.g the "birthday" presents, the "negative" gearing on the loan).
I thought there was some ruling about capital gains and capital losses.Dan42Member@dan42Join Date: 2008Post Count: 620
Any loss would be offset agains the gross capital gain (ie: before discounting), so the capital gain in your example would be
(200-20) / 2 = 90.
Secondly, a revenue loss CAN be offset against a capital gain, so it doesn't matter what type of loss you have in the trust.
There is no gain if you change trustees, because the trust is the beneficial owner of the property, not the trustee.
Lastly, I'm not sure where you heard about not having a Pty Ltd company as trustee. One downside is it is more expensive to set up, and you have an ASIC fee to pay every year for the company. Most trusts I see (admittedly they are running businesses in the trust) have a company as trustee.
thanks for that,
with the Pty Ltd as a trustee, is more to the fact, that I currently have a company, but that company is trading (i.e. it's in business). I was under the impression that was not the best option for the trustee to be a "trading" company, and I was just curious as to why.
1 reason I thoght was for asset protection, but then I thought any trustee could be sued, so the action was for the "director" of the trust (sorry mental blank can't remember the correct name) would then change the trustee.
MattDan42Member@dan42Join Date: 2008Post Count: 620
Generally, a company set up to act solely as trustee is the best option, because, if it is sued, it has minimal assets. Your trading conmpany, if that was sued, would bring your business into jeopardy.
You can change the trustee down the track, but it would be easier to get things set up correctly right from the start.