To work out the amount of a beneficiary's specific entitlement to a capital gain or franked distribution use the two following steps:
- Work out the beneficiary's entitlement as a percentage of the total financial benefits referable to the capital gain (reduced by capital losses consistently with the application of capital losses for tax purposes) or franked distribution (net of directly relevant expenses).
- Apply that percentage to the gross capital gain or franked distribution.
The result is the amount the beneficiary is specifically entitled to.
The total financial benefits referable to a capital gain will generally equal the capital gain as calculated for trust purposes less any losses the trustee has applied against the gain, to the extent that the corresponding capital losses were applied against that gain for tax purposes.
The total financial benefits referable to a franked distribution will generally equal the franked distribution less any directly relevant expenses. If all franked distributions have been dealt with within a single class, the total financial benefits referable to those (pooled) distributions will equal the total distributions less any directly relevant expenses.