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Capital Gains Tax: Trusts vs Individuals

Friday, 06 December 2013   (0 Comments)
Posted by: Author: Rigard Sevenster
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Author: Rigard Sevenster (MoneywebTax)

Many financial planners, and the general public at large, have expressed concern regarding when and to what extent they or their trust is liable for capital gains tax (CGT).  Knowing the different tax treatments will assist in choosing how to structure your estate and trust more effectively.

In this article we highlight some of the most important differences in CGT from either a trust or an individual's perspective.

Tax rates at a glance

As most people are aware, a normal trust is taxed on all taxable income at a fixed rate of 40%, whereas individuals earning above the threshold are taxed at their personal marginal rate, ranging between 18% to 40%, and qualify for certain exemptions and rebates. 

When a capital gain is realised within a trust, 66.6% of that gain has to be included for income tax purposes (taxed at 40% as stated), effectively meaning that a trust's CGT is 26.7%.  A trust has no yearly exclusion.  

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