Plain language law

New Zealand law explained for everyone

Income Tax Act 2007

Deductions - Expenditure specific to certain entities

DV 9: Trusts

You could also call this:

“Rules for income and deductions in trusts for beneficiaries and trustees”

When you receive income as a beneficiary of a trust, you can’t claim deductions for any costs or losses that the trustee had when earning that income. This means you can’t reduce your taxable income by using the trustee’s expenses.

When figuring out what deductions a trustee can make in a year, any income that goes to beneficiaries is treated as if it were the trustee’s income. This helps determine how much the trustee can deduct from the trust’s total income.

This rule works with the general rules about deductions in two ways. First, it stops you from claiming deductions that you might normally be allowed. Second, it adds to the general rule about what deductions are allowed, but the usual limits on deductions still apply.

This text is automatically generated. It might be out of date or be missing some parts. Find out more about how we do this.

View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1514159.

Topics:
Money and consumer rights > Taxes
Previous

DV 8: Non-profit organisations, or

“Tax reduction for non-profit organisations that don't distribute property to members”

Next

DV 10: Building societies, or

“Deductions available for building societies on certain expenses and share-related costs”

Part D Deductions
Expenditure specific to certain entities

DV 9Trusts

  1. A person who derives beneficiary income is denied a deduction for expenditure or loss that a trustee incurs in deriving the income.

  2. For the purpose of determining the deductions that a trustee is allowed in an income year, beneficiary income of beneficiaries of the trust in the income year is treated as trustee income.

  3. The link between this section and subpart DA (General rules) is as follows:

  4. subsection (1) overrides the general permission:
    1. subsection (2) supplements the general permission; the general limitations still apply.

      Compare