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HC 18: Taxable distributions from foreign trusts
or “Money from foreign trusts that counts as income”
You could also call this:

“Money from non-complying trusts is taxed separately”

If you receive money from a non-complying trust, it’s called a taxable distribution. This money is considered excluded income. This means you don’t have to include it in your regular income for tax purposes.

Even though it’s excluded income, you still have to pay income tax on the taxable distribution. The amount of tax you pay might be reduced by section HC 22. The rate of tax you’ll pay is set by section HC 34.

Remember, a non-complying trust is a special kind of trust that doesn’t follow all the normal tax rules. That’s why there are these special rules about how the money from it is taxed.

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Next up: HC 20: Distributions from complying trusts

or “Money from complying trusts is usually tax-free”
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Part H Taxation of certain entities
Trusts

HC 19Taxable distributions from non-complying trusts

  1. An amount that a person derives in an income year as a taxable distribution from a non-complying trust is excluded income of the person under section CX 59 (Taxable distributions from non-complying trusts).

  2. Despite subsection (1), section BF 1(b) (Other obligations) applies to impose income tax on the amount of the taxable distribution. Section HC 22 may apply to reduce the amount of the taxable distribution, and section HC 34 sets the rate of tax for the purposes of section BF 1(b).

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