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Income Tax Act 2007

Timing and quantifying rules - Financial arrangements rules - Consideration when anti-avoidance provision applies

EW 60: Trustee of deceased’s estate

You could also call this:

“How a deceased person's trustee handles their financial matters”

When someone dies, the person who looks after their money and belongings (called a trustee) can be treated as a ‘cash basis person’ for the dead person’s financial arrangements. This means they can use a simpler way to handle these money matters.

For this to happen, two things need to be true when the person died: they were already a ‘cash basis person’, and their financial arrangements met certain rules set out in section EW 54(1)(a) and (b).

If these conditions are met, the trustee can be a cash basis person for the year the person died and for the next four years. But if at any point during these five years the financial arrangements stop meeting the rules in section EW 54(1)(a) and (b), the trustee can’t be a cash basis person anymore for those arrangements.

When applying this rule, you need to look at sections EW 54 and EW 55 as if they were talking about someone who has died, not someone who is still alive.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1515391.

Topics:
Money and consumer rights > Taxes
Family and relationships > Adoption and guardianship
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“Commissioner can decide you're not a cash basis person for tax purposes”

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“Option to switch from cash basis to spreading method for financial arrangements”

Part E Timing and quantifying rules
Financial arrangements rules: Consideration when anti-avoidance provision applies

EW 60Trustee of deceased’s estate

  1. A trustee of a deceased’s estate is a cash basis person for financial arrangements in the estate in the circumstances described in subsection (2) for the period described in subsection (3).

  2. The circumstances are that, at the time of the deceased’s death,—

  3. the deceased is a cash basis person; and
    1. the financial arrangements in the deceased’s estate meet the requirements of section EW 54(1)(a) and (b).

      1. The period is the income year in which the deceased dies and in each of the 4 following income years. However, if at any time in those 5 income years the financial arrangements in the deceased’s estate cease to meet the requirements of section EW 54(1)(a) and (b), the trustee ceases to be a cash basis person for financial arrangements in the estate and cannot again be a cash basis person for them.

      2. For the purposes of this section, sections EW 54 and EW 55 are read with the modifications necessary to make them refer to the case of a deceased estate.

      Compare
      Notes
      • Section EW 60(2)(b): amended, on , by section 14(1) of the Taxation (Business Tax Measures) Act 2009 (2009 No 5).
      • Section EW 60(3): amended, on , by section 14(1) of the Taxation (Business Tax Measures) Act 2009 (2009 No 5).
      • Section EW 60(4): amended, on , by section 14(2) of the Taxation (Business Tax Measures) Act 2009 (2009 No 5).