Error making trust distributions

[Shamir]

Hi, 

A little back ground before I get to the problem.

I have a client with a trust which invests in shares and trust units.

There has been an accounting profit in the current year, but due to prior year losses, there is no profit to distribute to the beneficiary.

In the tax return, when I enter the various income components, the prior year tax losses do not offset the entire income amount.

The amounts that it does not offset is the net captial gain and foreign income. As a result the tax retun asks me to make a trust distribution to the beneficary and forces me to distribute the franking credits on the dividends.

Under trust law we are unable to distribute the franking credits if we do not have any accounting income.

In this scenario, please advise as to how I should proceed.

Is this an error in the software ?

Thanks

[Linda_K]

Hi @Shamir,

Thank you for your post.

This is a common query at MYOB, and we have prepared the following Knowledge Base article to assist you with this.

Please refer to KB 34098: Can I apply Carried Forward Losses to current year Capital Gains in a Trust Tax Return? 

I hope this helps.