HC 22Use of tax losses to reduce taxable distributions from non-complying trusts

1. This section applies in an income year when a person—

2. has, for the corresponding tax year, a tax loss component or loss balance to which sections IA 2 to IA 10 (which relate to the use of tax losses) apply; and
3. derives a taxable distribution from a non-complying trust to which section HC 19 applies.

4. The person may reduce the amount of the taxable distribution by an amount calculated using the formula—

   $tax\; loss\; \times \; tax\; rate\; ÷\; distribution\; rate.$

   Where:

5. In the formula,—

6. tax loss is the amount of a tax loss component or loss balance that the person chooses to use:
7. tax rate is the basic rate of income tax set out in schedule 1, part A, clause 3 (Basic tax rates: income tax, ESCT, RSCT, RWT, and attributed fringe benefits):
8. distribution rate is the basic rate of income tax set out in schedule 1, part A, clause 4.

9. If a person takes an amount of a tax loss or a loss balance into account under this section, the amount cannot be subtracted from their net income for the corresponding tax year for the purposes of section IA 2(2) (Tax losses).

Compare

• 2004 No 35 s HH 3(4)

Notes

• Section HC 22(3)(b): amended, on 1 April 2008, by section 562 of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).