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Income Tax Act 2007

Taxation of certain entities - Trusts

HC 32: Liability of trustee as agent

You could also call this:

“Trustee's responsibility to pay tax on money you receive from a trust”

When you get money from a trust as a beneficiary, the trustee has some responsibilities. This applies to any money you get as beneficiary income or a taxable distribution in a year.

If you get money from a community trust, this doesn’t apply to you.

The trustee acts like your agent. They have to make sure the income tax is paid on the money you get from the trust. This includes both your beneficiary income and any taxable distributions.

There’s another rule that can overrule this one. It’s called Section HD 4(b), which talks about how to treat principals.

Remember, the trustee is responsible for paying the tax, but the money you get from the trust is still your income.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1517354.

Topics:

Money and consumer rights > Taxes

HC 31B: Value transfer by deferral, or non-exercise, of right to demand payment, or

“Delaying or not asking for payment can be seen as giving a gift”

HC 33: Choosing to satisfy income tax liability of trustee, or

“Choosing to pay a trust's income tax as a trustee, settlor, or beneficiary”

Part H Taxation of certain entities
Trusts

HC 32Liability of trustee as agent

This section applies in an income year when a beneficiary of a trust derives an amount of beneficiary income or a taxable distribution.
Subsection (1) does not apply to a person who derives an amount from a community trust.
In their capacity as agent, the trustee must satisfy the income tax liability of the beneficiary for their beneficiary income and taxable distributions derived.
Section HD 4(b) (Treatment of principals) overrides this section.

Compare

2004 No 35 ss HH 3(2), HK 3(1A)

Notes

Section HC 32(2): amended (with effect on 1 April 2008), on 6 October 2009, by section 265(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).