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Income Tax Act 2007

Taxation of certain entities - Trusts

HC 39: Trustee income: disabled beneficiary trusts

You could also call this:

“Tax rules for trusts that only support people with disabilities”

When a trustee of a disabled beneficiary trust earns income in a year, the tax rate they pay on each dollar of their taxable income is set out in schedule 1, part A, clause 6B.

A disabled beneficiary trust is a special kind of trust. It has one or more beneficiaries, and all of them must be disabled beneficiaries. No one else can ever receive money from this trust, except when the trust ends and there are no disabled beneficiaries left alive.

You’re considered a disabled beneficiary for a year if you get certain types of support from the government. These include a supported living payment because you can’t work much, a child disability allowance, jobseeker support due to health issues or disability, or a disability allowance. You can also be a disabled beneficiary if you got some of these supports in the year you turned 65 or the year before that.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=LMS960440.

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Part H Taxation of certain entities
Trusts

HC 39Trustee income: disabled beneficiary trusts

  1. When a trustee of a disabled beneficiary trust derives trustee income in an income year, the basic rate of income tax for the trustee on each dollar of the trustee’s taxable income is set out in schedule 1, part A, clause 6B (Basic tax rates: income tax, ESCT, RSCT, RWT, and attributed fringe benefits).

  2. A disabled beneficiary trust is a trust—

  3. with 1 or more beneficiaries who are all disabled beneficiaries; and
    1. from which no person other than a disabled beneficiary may ever receive distributions, except on the dissolution of the trust if no disabled beneficiaries are alive.

      1. A disabled beneficiary, for an income year, is a person who—

      2. derives for the income year, under the Social Security Act 2018, 1 or more of the following:
        1. a supported living payment on the ground of restricted work capacity:
          1. a child disability allowance:
            1. jobseeker support on the ground of health condition, injury, or disability:
              1. a disability allowance; or
              2. satisfied 1 or more of paragraph (a)(i), (iii), or (iv) for the income year in which the person turned 65 years of age or the income year before that income year.

                Notes
                • Section HC 39: inserted, on , by section 97(1) (and see section 97(2) for application) of the Taxation (Annual Rates for 2023–24, Multinational Tax, and Remedial Matters) Act 2024 (2024 No 11).