I have a family discretionary trust that has both capital gain and ordinary income. It also has various operating expenses such as administration salary and accounting fees etc. When determining the end of year distribution to beneficiaries of the trust what is the acceptable means of allocating these expenses. Is it possible to allocate the expenses all against capital gain or all against income or at some intermediate desirable mix (at the discretion of the trustee presuming the trust deed allows that). I can see advantages in allocating expenses against capital gains especially in the case where discount capital gains are available.