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Specific entitlement

Find out about beneficiaries and specific entitlements.

Last updated 12 October 2020

A beneficiary who is specifically entitled to a capital gain or franked distribution received by a trust is generally assessed for tax on the gain or distribution. They also get the benefit of any franking credits attached to a franked distribution (subject to integrity rules).

A trustee of a resident trust can choose to be specifically entitled to a capital gain of their trust – making the choice in the trust tax return – in which case the trustee is taken to be specifically entitled to all of the capital gain. This choice can only be made if no part of the capital gain is paid or applied for the benefit of a beneficiary.

A trustee can't choose to be specifically entitled to a franked distribution in the same manner.

Explains the conditions for a beneficiary to be specifically entitled to a trust capital gain or franked distribution.

How to work out the amount of a beneficiary's specific entitlement to a capital gain or franked distribution.

Specific entitlement can't be established for some amounts, including notional, zero amounts and franking credits.

Capital gains and franked distributions are allocated to beneficiaries and the trustee.

QC24534