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  #   012-046 - Discretionary Trusts - Taxation Treatment

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  This paper analyses how Discretionary Trusts are subject to income tax and capital gains tax. The paper includes a number of Flow Charts to assist in: the illustration of the operation of "Family Trusts" the treatment of losses carried forward and bad debts Family Trust Election The paper is ...[Read more](#hikashop_show_tabular_description)

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 This paper analyses how Discretionary Trusts are subject to income tax and capital gains tax. The paper includes a number of Flow Charts to assist in:

- the illustration of the operation of "Family Trusts"
- the treatment of losses carried forward and bad debts
- Family Trust Election

The paper is presented in twenty-two pages, under the headings:

- Introduction To Discretionary Trusts
- Determination Of Discretionary Trust Profit
- Discretionary Trust Taxable Income
- Comparison To Partnerships
- Discretionary Trust Paying Tax
- Capital Gain
- Trust Distributions To Children
- Trust Losses
- Bad Debts
- Tests Which Apply To A Discretionary Trust To Determine Whether A Claim Can Be Made For Prior Year Losses, Current
- Year Losses Or Bad Debts
- Family Trusts
- Family Trust Election
- Family Control Test
- Distribution Of Income From A Family Trust
- Distributions From A Family Trust To An Interposed Entity
- Income Injection Test
- Family Trusts - Is This The Right Election To Make?
- Tests That Apply To Determine Deductibility Of Trust Losses And Bad Debts For A Discretionary Trust That Is Not A “Family Trust”
- Control Test
- Pattern Of Distribution Test
- Income Injection Test For Trusts Which Are Not “Family Trusts”
- Treatment Of Losses In A Company If A Discretionary Trust Owns More Than 50% Of The Shares In The Company
- Capital Gains Tax Issues For Discretionary Trusts

ADDENDUMS

- Tests For Determining Whether A Discretionary Trust Is A “Family Trust”
- Distributions From A Family Trust To An Interposed Entity; Elections Necessary; If Distributions Not In Accordance With The Election - Family Trust Distribution Tax (46.5%)
- Additional Test That A Family Trust Has To Satisfy To Claim Losses Or Bad Debts
- Tests That A Trust, Which Is Not A Family Trust, Has To Satisfy To Claim Losses Or Bad Debts