All Topics / Help Needed! / franking credits and discretionary trusts

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  • Profile photo of aaabbbcccaaabbbccc
    Participant
    @aaabbbccc
    Join Date: 2009
    Post Count: 71
    January 2, 2010 - 4:20 am

    Hi Everyone,

    For shares held by a discretionary trust, how are dividends and franking credits treated?

    Could the trust distribute franking credits to one beneficiary, and the unfranked portion to another?

    Any thoughts appreciated,

    .

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,213
    January 2, 2010 - 9:38 am

    I think the franking credits would have to go with the unfranked portion.

    There are some things to watch out for with franking credits and DTs. The trust must make a family trusty election, and if there is a loss the franking credits are lost.

    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 aaabbbcccaaabbbccc
    Participant
    @aaabbbccc
    Join Date: 2009
    Post Count: 71
    January 2, 2010 - 12:23 pm

    Thanks Terry,

    That seems pretty harsh that if the Trust makes a loss, the franking credits are lost as well! I thought there would be some capacity to carry forward the franking credits with the loss in order to be offset by gains in future years. Is this the case, or are the credits simply gone, and if so where do they go??

    Apart from seeing my accountant, do you know of any good websites that explain some of these minor details for DTs, UTs, HTs and PITs?

    Cheers,

    .

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,213
    January 3, 2010 - 3:07 am

    hi aaabbbccc

    Not sure on the franking credits.

    Do a google for trusts and read any document from the major law firms. There is heaps out there. taxlawyer.com.au is a good one as is lawcentral.com.au

    Also look at the ATO legal database.
    I just found these on shares and trusts:
    http://law.ato.gov.au/atolaw/view.htm?docid=TXR/TR9213/NAT/ATO/00001

    http://law.ato.gov.au/atolaw/view.htm?locid=%27AID/AID20021070%27&PiT=99991231235958

    http://law.ato.gov.au/atolaw/view.htm?rank=find&criteria=AND~franking~basic~exact:::AND~credits~basic~exact:::AND~discretionary~basic~exact:::AND~trust~basic~exact&target=JA&style=java&sdocid=AID/AID2004859/00001&recStart=1&PiT=99991231235958&recnum=12&tot=73&pn=ALL:::ALL

    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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