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Trusts Act 2019

Trustees’ powers and indemnities - Powers of trustee - Power to determine treatment of returns and accounts

61: Apportionment of receipts and outgoings between income and capital

You could also call this:

"How trustees can fairly split money between income and capital accounts"

Illustration for Trusts Act 2019

When you are a trustee, you have some powers to decide how to handle money that comes in or goes out. You can only use these powers if it is fair and reasonable, and if you are doing what most businesses would do. You can decide how to split money between the income and capital accounts, or you can put all of the money into one account. You can also move money from one account to another to fix mistakes or to pay for things that you already paid for.

You can take money from the income account to pay for things that are getting old or worn out, and then add that money to the capital account. This means you do not have to follow the old common law and equity rules about how to split money. If you are buying or selling land, or renting land, you have to follow the rules in the Property Law Act 2007 to decide how to split the money.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM7382954.

Topics:
Money and consumer rights > Banking and loansHousing and property > Buying and selling homesHousing and property > Land use
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Part 4Trustees’ powers and indemnities
Powers of trustee: Power to determine treatment of returns and accounts

61Apportionment of receipts and outgoings between income and capital

  1. A trustee’s powers under subsection (2) may be exercised only—

  2. if the exercise of the power is fair and reasonable in all the circumstances; and
    1. in accordance with accepted business practice.

      1. A trustee may—

      2. apportion any receipt or outgoing relating to any period of time between the income and capital accounts, or charge any outgoing or credit any receipt exclusively to or from income or capital:
        1. transfer funds between capital and income accounts—
          1. to recover or reimburse an outgoing previously charged to the account that is to receive the funds:
            1. to recover or deduct any receipt previously credited to the account from which the funds are to be recovered:
            2. deduct from income an amount to meet the cost of depreciation, and add the amount to capital.

              1. This section extinguishes the rules of common law and equity relating to the apportionment of receipts and outgoings.

              2. If a trustee is the landlord, tenant, vendor, or purchaser of land, the apportionment rules in the Property Law Act 2007 apply in respect of that land.