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Rateable reduction

Last updated 12 October 2020

In some circumstances, Subdivision 115-C of the ITAA 1997 reduces the capital gains of the trust assessed to the beneficiaries and trustee to ensure they are not assessed on more than the total net income of the trust.

The reduction applies if the sum of the franked distributions (less directly relevant deductions) and net capital gain of the trust exceeds the net income of the trust (excluding franking credits). For example, this may occur if a trust's only income is from capital gains and franked distributions and it has general management expenses.