- Streaming under the trust deed
- Specific entitlement
- Capital gains
- Franked distributions
- Avoiding double taxation – Division 6E
This information is for trustees and beneficiaries of trusts that make capital gains or receive franked distributions.
A trust's capital gains and franked distributions can, if not prevented by the trust deed, be streamed to beneficiaries for tax purposes by making them specifically entitled to the amounts.
This allows beneficiaries to offset capital gains with their capital losses, apply applicable discounts and, subject to integrity rules, get the benefit of any franking credits attached to a franked distribution.
Capital gains and franked distributions to which no beneficiary is specifically entitled are allocated proportionately to beneficiaries based on their present entitlements to trust income (calculated by excluding capital gains and franked distributions to which any entity is specifically entitled). The trustee is taxed in respect of any amounts to which no beneficiary is specifically or presently entitled.
Trustees of managed investment trusts (MITs) and others treated as MITs may be able to choose, on an irrevocable basis, whether to apply the trust streaming provisions under proposed changes – see the Tax Laws Amendment (New Tax System for Managed Investment Trusts) Bill 2015External Link. References to the 'net income of the trust' throughout this document are referring to the trust's net income as defined in Division 6 of Part III of the ITAA 1936 (Division 6). In the context of the taxation of trusts, this is the equivalent legislative term to 'taxable income'.