Section DX 1 — Income Tax Act 2007: Testamentary annuities

DX 1 Testamentary annuities When this section applies (1) This section applies when— (a) property is subject to the payment of an annuity— (i) because of a provision in a will; or (ii) because of a court order under the Family Protection Act 1955 ; or (iii) because of a deed of family arrangement; and (b) the property, or property substituted for it, is transferred to a beneficiary; and (c) the property transferred, or property that the beneficiary substitutes for it, is charged with the payment of the annuity or part of the annuity. Deduction (2) The owner of the property, or the substituted property, is allowed a deduction for an amount that they pay on account of the annuity. Exclusion (3) The owner is denied a deduction— (a) if the owner is not a beneficiary but a person who has bought the property subject to the condition that they assume the liability for the annuity, or a part of it: (b) to the extent to which the annuity is payable under a court order or under a deed of family arrangement and represents consideration for the purchase of the property, or the substituted property, by the owner. Amount of deduction (4) The deduction is limited in an income year to the amount that would be the net income of the owner for the corresponding tax year if the owner’s only income in the income year were from the property, or the substituted property. Meaning of beneficiary (5) In this section, beneficiary — (a) means— (i) a person to whom a testator has left the property in their will; or (ii) a person to whom the testator has given a right to buy the property in their will; and (b) includes a person who is entitled to the property under— (i) an order of a court under the Family Protection Act 1955; or (ii) a deed of family arrangement. Link with subpart DA (6) This section supplements the general permission and overrides the private limitation. The other general limitations still apply. Defined in this Act: amount , arrangement , beneficiary , deduction , general limitation , general permission , income , income year , net income , pay , private limitation , supplement , tax year , Compare: 2004 No 35 s DX 1