• Capital gains made by trust

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    This information may not apply to the current year. Check the content carefully to ensure it is applicable to your circumstances.

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    Step 1-Exclude net capital gains from trust income item.

    If you are a beneficiary of a trust, you may be entitled to (or may have received) a share of the net income of the trust which includes some of the trust's net capital gain. In this case, you do not include your share of the trust's net capital gain at item 12 Partnerships and trusts on your tax return. Instead, you are treated as having a capital gain (or capital gains) worked out, as explained in step 2.

    Note-Item 12 on tax return for individuals

    Question 12 in TaxPack 2002 asks you to exclude net capital gains from the amount of trust income shown at U item 12 on your tax return. In your distribution statement, the trust should state the amount(s) of capital gain in your trust distribution.

    However, if your statement shows that your share of the trust's net capital gain is more than the overall net amount of your share of the trust's net income, do not exclude the whole capital gain component when you complete item 12 on your tax return. In this situation, you exclude instead only the overall net amount of your share of trust income. You also use only this lesser amount in working out your capital gains.

    Example

    Capital gain greater than share of trust net income

    Debra's trust distribution shows that she received $2,000 as her share of the net income of a trust.

    This is made up of a primary production loss of $5,000, non-primary production income of $2,000 and a net capital gain of $5,000.

    At item 12 on her tax return, Debra will show $5,000 loss from primary production at L and $5,000 non-primary production income at U.

    She excludes only $2,000 from item 12 because her share of the net income of the trust ($2,000) is less than her share of the net capital gain. The $2,000 is the amount Debra uses in working out her net capital gain at A item 17 on her tax return.

    Last modified: 06 Oct 2009QC 27417