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tax treatments of capital gain / loss by HDT

Discussion in 'Accounting, Tax & Legal' started by pthm, 6th Oct, 2007.

  1. pthm

    pthm Well-Known Member

    Joined:
    25th Aug, 2005
    Posts:
    136
    I understand that net income (profit) must be distributed by a hybrid discretionary trust (HDT) at the end of each tax year; but net loss cannot be distributed and must be quarantined (carried forward) in the trust to be offset against any future income.

    My question is in regard to capital gain / loss by HDT. We plan to sell one of the properties in our trust. If there is a capital gain from the sale, then I understand that the trust can distribute the gain to the lower income beneficiary. However, if there is a capital loss, then is this capital loss stayed in the trust and carried forward to be offset against any future capital gain? Or, what would the tax treatment be for it?

    Appreciated any views / comments. Thanks in advance.
     
  2. Rob G.

    Rob G. Well-Known Member

    Joined:
    6th Jun, 2007
    Posts:
    717
    Location:
    Melbourne, VIC
    Capital losses for a trust are treated just like any other entity.

    Losses are carried forward to set off against future capital gains, so they remain in the name of the Trustee until they are used up by the Trustee.

    See the general guide to Capital Gains Tax on the ATO website.

    Cheers,

    Rob
     
  3. pthm

    pthm Well-Known Member

    Joined:
    25th Aug, 2005
    Posts:
    136
    thanks, Rob, for your reply. :)