Managed investment trusts

Check the income to declare, when to report a loss, and deductions you can claim for managed investment trusts.

Types of managed investment trusts

Managed investment trusts include:

• cash management trusts
• money market trusts
• mortgage trusts
• unit trusts
• managed funds, such as a property trust, share trust, equity trust, growth trust, imputation trust or balanced trust.

Trust income and credits

You must show any income or credits you receive from any trust investment product on your tax return. Your distribution advice or statement from the trust will show the information you need to complete your tax return, including:

• income and capital gains from a trust, including a managed fund
• capital gain or loss when you dispose of your managed investment trust units
• your share of a national rental affordability scheme tax offset.

You can also claim credits for tax:

• paid on or withheld from trust income
• withheld from fund payments from a managed investment trust
• withheld from trust income subject to foreign resident withholding
• withheld from trust income subject to non-resident withholding tax, if you were in fact a resident.

Trust losses

If a trust makes an overall loss in an income year, the loss is retained in the trust – there is no amount of net income available for distribution.

However, in some cases you are required to report a loss on your tax return. This happens if you are eligible to use the averaging provisions available to primary producers and the trust has made a loss from its primary production activities but has an overall net income amount, part or all of which it distributes to you.

Your distribution advice or statement from the trust will separately identify your share of any primary production loss (which is needed for averaging purposes) and your share of other income.

For information on Trust loss provisions, see Trust loss provisions.

Trust income deductions

Tax deductions for managed investment trusts can include:

• management fees
• specialist journals
• interest on money you borrowed to invest.

If you made a prepayment of $1,000 or more in relation to your managed investment, there are special rules which may affect the amount you can deduct.

You can’t claim a deduction for:

• expenses incurred in deriving exempt income or non-assessable non-exempt income – such as expenses incurred in deriving distributions on which family trust distribution tax or trustee beneficiary non-disclosure tax has been paid
• amounts the trust has already claimed or that only the trust can claim, – such as expenditure on landcare operations or water facilities.

Capital gains from a trust

Distributions from trusts can include different types of amounts. The following two are relevant for capital gains tax (CGT) purposes:

• capital gains
• non-assessable payments.

Non-assessable payments mostly affect the cost base of units in a unit trust (including managed funds) but can in some cases create a capital gain.

The trustee should advise you whether the CGT discount, the small business 50% active asset reduction, or both, have been taken into account in working out the trust’s net capital gain.