Paying tax within a discretionary trust

Discussion in 'Accounting & Tax' started by redsquash2, 2nd Jul, 2020.

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  1. redsquash2

    redsquash2 Active Member

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    Thanks Mark but CGT is levied as it is an investment property
     
  2. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    The costbase for a deceased estate needs to be understood
    The estate will be taxed like a human for the first three years.
    It depends what occurs with the property on the tax outcomes. I would be seeking tax and legal advice and support as a executor likely lacks competency in tax & estate legal affairs and this could leave them open to mistake or poor judgement. For example just because tax law permits a 3 year period this may be quite inconsistent with a deceased estate and the two year CGT exemption rule (if it applies) may also be a important factor in decisions.
     
  3. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    1. The DT will have a trust deed. The edeceased estate is based on a will (perhaps)
    2. A deceased estate has very different tax laws applied v a discretionary trust
    3. A deceased estate usually has no discretionary elements. A deceased estate can have some elements where the executors must follow the will but may need advice so that they can use their discretion to maximise benefits and outcomes without altering beneficial entitlements eg Distribute cash to one beneficiary and shares to another. But using that as an example, the shares may have a accrued tax liability attached so the value of the shares alone should NOT be used for determining a "share" of the estate