Income Tax Act 2007

Avoidance and non-market transactions - Avoidance: specific

GB 22: Arrangements involving trust beneficiary income

You could also call this:

“Rules for fair distribution of trust benefits to beneficiaries”

If you’re part of a trust, there are some rules about how the trust can give things to people. These rules are meant to make sure that the trust is fair to everyone who is supposed to benefit from it.

If the trust gives property, services, or other good things to someone who isn’t supposed to benefit from the trust, and this goes against the rules about how beneficiaries should get income from the trust, then something special happens. The law will treat it as if the actual beneficiary got those things instead.

This rule applies to most trusts, but not to Maori authorities, which have their own special rules.

So, if you’re a beneficiary of a trust and the trust tries to give things to other people instead of you in a way that’s not allowed, the law will still count those things as if you got them. This is to make sure that the rules about trust income for beneficiaries are followed properly.

You can find more details about the rules for beneficiary income in sections HC 17 to HC 23.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1516956.

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Part G Avoidance and non-market transactions
Avoidance: specific

GB 22Arrangements involving trust beneficiary income

  1. This section applies when—

  2. an arrangement involves a trustee transferring property, or providing services or other benefits, to a person other than a beneficiary of the trust; and
    1. the arrangement has the effect of defeating the intent and application of sections HC 17 to HC 23 (which relate to the income of beneficiaries) in relation to the beneficiary; and
      1. the trust is not a Maori authority.
        1. The beneficiary is treated, for the purposes of sections HC 17 to HC 23, as receiving the property or enjoying the services or benefits.

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