Plain language law

New Zealand law explained for everyone

Income Tax Act 2007

Timing and quantifying rules - Income equalisation schemes - Refunds: on application

EH 22: Income when refund given on death, and election to allocate amount to later year or years

You could also call this:

“Trustee can move deceased's income equalisation refund to later years”

When someone with a main income equalisation account dies, their trustee has options for handling the money in the account. If the trustee doesn’t choose to use section EH 21, they can decide to move some or all of the money to a later year or years.

You can only move the money to a year that’s within 3 years after the person died, or within 5 years after the end of the year when a deposit was made (if you’re moving that deposit). The money stays in the account until it’s given back to the trustee in the year it was moved to, or until it can’t be given back because of section EH 28.

When the trustee moves money to a later year, it counts as income for the person who died in that later year, under section CB 27.

To move the money, the trustee needs to tell the Commissioner in writing. They need to say how much money they’re moving and which year they’re moving it to. The trustee has to do this either when they file the person’s tax return for the time up to when they died, or at a later time if the Commissioner allows it.

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 It might be out of date or be missing some parts.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=DLM1514866.

Topics:
Money and consumer rights > Taxes
Previous

EH 21: Income when refund given on death, and election to allocate amount to earlier year, or

“Handling tax refunds after death: Trustees can allocate income to earlier years”

Next

EH 23: Refund on bankruptcy, or

“What happens to your income equalisation account if you go bankrupt”

Part E Timing and quantifying rules
Income equalisation schemes: Refunds: on application

EH 22Income when refund given on death, and election to allocate amount to later year or years

  1. This section applies when—

  2. the trustee of the person’s estate does not make an election under section EH 21; and
    1. the trustee chooses to allocate some or all of the amount that is in the person’s main income equalisation account on the date of the person’s death to an accounting year or years after that date.

      1. The accounting year or years referred to in subsection (1)(b) must be within the earlier of—

      2. the 3 years after the date of the person’s death; and
        1. the 5 years after the end of the accounting year for which a deposit or a part of a deposit was made, if the amount that the trustee allocates to a later accounting year or years includes the deposit or part of it.

          1. An amount allocated by the trustee to a later accounting year remains in the person’s main income equalisation account until—

          2. it is refunded to the trustee in the accounting year to which it is allocated; or
            1. it is not refunded because of the application of section EH 28.

              1. An amount allocated by the trustee to a later accounting year is income, under section CB 27 (Income equalisation schemes), derived by the person in the corresponding accounting year.

              2. A trustee makes an election under this section by a notice that—

              3. specifies—
                1. each amount allocated to a later accounting year; and
                  1. the accounting year to which each amount is allocated; and
                  2. is given to the Commissioner within 1 of the following times:
                    1. the time within which the trustee is required to file a return of the person’s income for the period to the date of the person’s death:
                      1. a further time allowed by the Commissioner in a case or class of cases.

                      Compare