Practitioner Edition

11.3.1.1 Understanding Capital Gains Data

To correctly complete the Trust Distributions Table, you need some understanding of how the Australian Taxation Office treats capital gains. This page explains how to correctly calculate Grossed Up Capital Gains (for Column I in the Trust Distributions Table) and Tax Free Capital Gains income (to include in Column E in the Trust Distributions Table).

The Australian Taxation Office states, on its website at https://www.ato.gov.au/general/capital-gains-tax/shares,-units-and-similar-investments/managed-investment-fund-(trust)-distributions/:

If you’re a unit holder in a managed investment fund (in legal terms, a trust) and have received a distribution that includes a net capital gain, you need to take your share of the net capital gain into account in working out your own net capital gain for the year – to the extent that your share doesn’t exceed the overall net amount of your distribution from the trust.

Your statement of distribution or advice should show your share of the trust net capital gain…

…Your managed fund statement should also show whether any discounts or reductions were applied by the trustee in determining the amount of the capital gain. You’ll need to know this in order to work out the correct amount to include in your own net capital gain calculation.

Mclowd provides columns for Indexed Capital Gains, Discounted Capital Gains and Other Capital Gains.

Capital gains may be shown on your statement as TARP (Taxable Australian Real Property) or Non-TARP.

Trustees entering Discounted Capital Gains in the Mclowd Trust Distributions table will generally need to gross up the amount. Some entities show the grossed up amount on the statement.

If the amount shown is not indicated specifically as ‘’grossed up’’ or accompanied by an instruction to enter it at Tax Return Label 18H (as opposed to label 18A which is used for net capital gain) it is likely you will need to multiply the amount by 2 before entering it.

Indexed Capital Gains and Other Capital Gains maybe entered as shown on the statement and do not need to be grossed up.

Calculating Tax Free Capital Gains

Some statements may show CGT concession amounts as well as Discounted Capital Gains Diistributed. In such cases, the calculation of the amount to enter in Mclowd is a little more complex. In this instance, use these formulas (refer to example below for clarity):

  • Value in Mclowd column I = ((Discounted Capital Gains TARP + Discounted Capital Gains NTARP) x 2)
  • Value in Mclowd column E (Tax Free) = (Discounted Capital Gains TARP + Discounted Capital Gains NTARP + CGT concession amount TARP + CGT Concession Amount NTARP) MINUS Value in Column I (as calculated above)

Capital gains calculation for Trust Distribution table

Capital Gains Trust Distributions entries example

 

 

 

 

 

NEXT: TRUST DISTRIBUTION TABLE ENTRIES: EXAMPLE 1

about the author:

Lorraine Cobcroft

With a background in accounting and financial management, followed by two decades writing software documentation, Lorraine joined the Mclowd team in mid-2016 and is enjoying working with a dynamic team to enhance an innovative product that has the potential to revolutionize the way Australians manage their retirement funding. Lorraine is also an accomplished business writer, ghost-writer, novelist and short-story writer and poet.

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