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Family Trust Capital Gains

Discussion in 'Accounting, Tax & Legal' started by pb100, 7th Jun, 2011.

  1. pb100

    pb100 New Member

    Joined:
    7th Jun, 2011
    Posts:
    1
    Location:
    Kingaroy, QLD
    I am the Trustee of a Family Trust which this year started trading futures on a regular basis.

    This year the Trust has a profit from the futures trading and a loss from the sale of units in a managed fund that were purchased a couple of years ago.

    I would like to claim the futures profits as capital gain to offset the (I presume capital) losses from the managed fund. Is that OK?

    I presume I can do this if I consider the Trust as a "speculator", not a "trader" is that correct? Can I make the choice as to what the Trust is?

    Cheers
    Paul
     
  2. Rob G.

    Rob G. Well-Known Member

    Joined:
    6th Jun, 2007
    Posts:
    717
    Location:
    Melbourne, VIC
    Hi,

    No you cannot make a choice as to whether you are a trader or an investor, it depends on the facts.

    TR 97/11 should assist in determining whether a business is carried on. Profit motive, repetition, scale and nature of the transactions have an important influence on the decision.

    It is possible that you could be conducting a business of futures trading but also hold investments in managed funds. One could be income, another a capital loss so you cannot set off the loss.

    Best get some advice from your Accountant and/or a ruling from the ATO regarding your precise facts.

    If the trust treats the trades as capital then you had better have some other trust law income to distribute otherwise the trustee might be assessed on the capital gain at the top marginal rate without the discount. Hopefully some managed fund income distributions have been received this financial year or the trust definition of income is favourable. Another thing to check with your Accountant.

    Cheers,

    Rob
     
    Last edited by a moderator: 8th Jun, 2011