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Capital gains tax

To understand the function of the Trust Distributions Table, and how it calculates values to transfer to your Fund’s Tax Return, you need some understanding of how the Australian Taxation Office treats capital gains.

The following text is provided as general information to assist your understanding of the calculation process and, optionally, verify figures transferred to your Financial Reports and Tax Return.

The Australian Taxation Office states on its website:

“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 fund’s 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 (H), Discounted Capital Gains (I), and Other Capital Gains (J).

Capital gains may be shown on your statement as TARP (Taxable Australian Real Property) or Non-TARP (not related to Australian Real Property).

Some entities show the grossed-up amount on the statement. Most show the amount not grossed up. If you see the words ‘Grossed Up’ next to the figures, check carefully that you are reading the correct page of the statement. Many entities provide separate statements for Individuals showing grossed-up amounts, and for Trusts, Superannuation Funds, etc. with amounts no grossed up.

From a data entry perspective, Mclowd’s Annual Distribution screen makes a default assumption that you have used a 50% discounted value for the ‘Discounted Capital Gain Domestic/Foreign’ fields (i.e. that the figures are not grossed up).

Based on this assumption, if your statement shows Capital Gains already grossed up, use this formula to find the amount to enter into the table:

(Discounted Capital Gain Domestic + Discounted Capital Gain Foreign) / 2

Note: Mclowd will not display the grossed up figure in the table. The calculation is completed in the next step, when capital gains are calculated.

Some statements may show CGT concession amounts as well as Discounted Capital Gains Distributed. Use these formulas to enter Capital Gains and Concession Amounts. (Refer to example below for clarity):

Value in Mclowd column I = ((Discounted Capital Gains TARP + Discounted Capital Gains NTARP)

Value in Mclowd column E (Tax Free) = CGT Concession amount TARP plus CGT Concession amount NTARP