Friday, June 5, 2009

Tax Planning Strategy - Unit Trusts

Unit holders will be taxed on distribution received from a unit/property trust. The income distributed will include a tax credit which is actually tax paid by the unit trust company. The unit holders can therefore utilise the tax credit available to set off against their tax payable. Any excess of tax credit over the tax payable will be refunded by the tax authorities to the unit holders.

Income distributed out of exempt income or gains made from the sale of investments (shares/property) of a unit/property trust is not taxable in the hands of unit holders.
Unit holders who choose to receive their income distribution in the form of new units are regarded as having purchased extra units and these fresh units are not subject to tax.

Gains realised by unit holders on the transfer or redemption of the units are treated as capital gains and therefore not taxable.

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