Discretionary Trust Tax

Discretionary trust tax of 6% applies to the value of the trust fund on the creation of the trust and annual tax of 1% applies to value of the entire fund each year for the duration of the trust. Can a beneficiary of a trust subsequently offset discretionary trust tax as a credit against capital acquisitions tax when the beneficiary receives the proceeds of the trust?

There's more to it than that.

It's a while since I looked at it, but from memory DTT only arises when the settlor dies, the beneficiary ceases to be a minor and something else.

You should get advice.

Gordon Gekko said:

You should get advice.

Click to expand...

I did. The first sentence is what the tax adviser provided. The adviser couldn't provide an answer to the question on offsetting DTT as a tax credit against CAT. Thanks for your response.

You should stop getting advice from that person.

DTT at 6% arises at the later of:

- The property going into the trust
- The death of the person who puts the property into the trust
- The youngest beneficiary (who are offspring) turning 21

Thereafter it's 1% per year.

If the property is paid out within 5 years of the 6% charge, half of it is refunded.

The 6% and the 1% don't arise in the same year.

There's no credit against CAT