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Income Tax Act 2007

Recharacterisation of certain transactions - Distribution, transmission, and gifts of property

FC 4: Property transferred to charities or to close relatives and others

You could also call this:

"What happens to property when it's given to charities or family members after someone dies"

Illustration for Income Tax Act 2007

When someone dies, their property is transferred to others. You need to look at section FC 1(1)(b) to see if this section applies. This section applies if the property is transferred to certain people. You can be a beneficiary if you are a close relative or a charity. Charities are organisations that help people, and they are exempt from paying tax on some income, as described in sections CW 41, CW 42, and CW 43. The net income of the estate is distributed according to the will or the rules governing intestacy, and by the trustee's legal obligations. The transfer of property is treated as a transfer of property on a settlement of relationship property under subpart FB.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1516385.

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Part FRecharacterisation of certain transactions
Distribution, transmission, and gifts of property

FC 4Property transferred to charities or to close relatives and others

  1. This section applies in the circumstances described in section FC 1(1)(b) when tax-base property is transferred on a person’s death if—

  2. each beneficiary of the deceased person is described in subsection (2); and
    1. no life interest in the property is created; and
      1. no trust over the property is created, other than a trust to execute the will and administer the estate; and
        1. the net income of the estate is distributed as described in subsection (3).

          1. A beneficiary of the deceased person must be—

          2. a close relative of the deceased person:
            1. a person exempt under section CW 41, CW 42, or CW 43 (which relate to exempt income of charities).

              1. While the administration of the estate is continuing, the net income of the estate is distributed to the extent allowed—

              2. under the will or the rules governing intestacy; and
                1. by the trustee’s legal obligations.

                  1. The transfer is treated as a transfer of property on a settlement of relationship property under subpart FB (Transfers of relationship property).

                  Notes
                  • Section FC 4: replaced (with effect on 1 April 2008 and applying for the 2008–09 and later income years), on , by section 167(1) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
                  • Section FC 4(1): amended (with effect on 6 October 2009), on , by section 168(1) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
                  • Section FC 4(4): amended (with effect on 6 October 2009), on , by section 168(2) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).