Does the definition of ‘distributable income’ in the NI discretionary trust deed distinguish between ‘trust income’ and ‘taxable income

The distributable income of the trust includes, whether derived directly or indirectly (including by entitlement through other trusts) all capital gains (including any discount capital gain under subdivision 115-A Income Tax Assessment Act 1997 (Cth)) received by the trust during the relevant period and that capital gains can be identified as a separate category of income.

We recommend that any distribution resolution is crafted to ensure that distributable income includes gross capital gains, not the discount gains or alternatively that a capital distribution for the discount amount is included in the resolution (if the gain is to be streamed). For this to be effective, the trust accounts must be consistent with the resolution (i.e. including the gross gain in the distributed amount).

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