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Income Tax Act 2007

Taxation of certain entities - Trusts

HC 7: Trustee income

You could also call this:

"Money a trustee earns that isn't given to someone else, which is taxed"

Illustration for Income Tax Act 2007

You get trustee income when a trustee earns money and it is not given to a beneficiary. Trustee income is money a trustee earns that is not beneficiary income. You pay tax on this money. When a minor gets beneficiary income, it is treated as trustee income for tax purposes. This means the trustee pays the tax and gives the tax return. The tax rate is the basic rate set out in schedule 1, part A, clause 3. If a trustee gets a property settlement, they have trustee income equal to the market value. They must reduce this by the amount given to beneficiaries or as a taxable distribution. You can find more information about property settlements in section HC 4(3) to (5). Some beneficiary income is treated as trustee income for tax purposes. This includes income that section HC 35 or section HC 38 applies to. The tax rate is the basic rate set out in schedule 1, part A, clause 3.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1517266.

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Topics:
Money and consumer rights > Taxes
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Part HTaxation of certain entities
Trusts

HC 7Trustee income

  1. To the extent to which it is not beneficiary income, an amount of income derived by a trustee of a trust is trustee income.

  2. An amount of beneficiary income to which section HC 35 applies that is derived in an income year by a person who is a minor is—

  3. treated as trustee income for the purposes of who pays the tax and who provides the return of income; and
    1. subject to the basic rate of income tax set out in schedule 1, part A, clause 3.

      1. An amount of beneficiary income to which section HC 38 applies is—

      2. treated as trustee income for the purposes of who pays the tax and who provides the return of income; and
        1. subject to the basic rate of income tax set out in schedule 1, part A, clause 3.

          1. The trustee of a trust has, from a property settlement that is referred to in section HC 4(3) to (5) and made in an income year, an amount of trustee income for the income year equal to the market value of the property settlement reduced by the amount of the market value that the trustee treats as beneficiary income, or as a taxable distribution made by the trustee, in the income year.

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          Notes
          • Section HC 7(2): replaced, on , by section 88(1) (and see section 88(4) for application) of the Taxation (Annual Rates for 2023–24, Multinational Tax, and Remedial Matters) Act 2024 (2024 No 11).
          • Section HC 7(2B) heading: inserted, on , by section 88(2) (and see section 88(4) for application) of the Taxation (Annual Rates for 2023–24, Multinational Tax, and Remedial Matters) Act 2024 (2024 No 11).
          • Section HC 7(2B): inserted, on , by section 88(2) (and see section 88(4) for application) of the Taxation (Annual Rates for 2023–24, Multinational Tax, and Remedial Matters) Act 2024 (2024 No 11).
          • Section HC 7(3): replaced (with effect on 1 April 2008), on , by section 134(1) (and see section 134(3) for application) of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
          • Section HC 7 list of defined terms tax: inserted, on , by section 88(3) of the Taxation (Annual Rates for 2023–24, Multinational Tax, and Remedial Matters) Act 2024 (2024 No 11).
          • Section HC 7 list of defined terms taxable distribution: inserted (with effect on 1 April 2008), on , by section 134(2) of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).