Section HC 15 — Income Tax Act 2007: Taxable distributions from non-complying and foreign trusts

HC 15 Taxable distributions from non-complying and foreign trusts When subsection (2) applies (1) Subsection (2) applies for a trust that is a non-complying trust at the time a distribution to a beneficiary is made. Taxable distributions: non-complying trusts (2) The distribution is a taxable distribution to the extent to which it is not a distribution of— (a) beneficiary income; or (b) a part of the corpus of the trust; or (c) a payment or a transaction that represents a distribution of the corpus of the trust. When subsection (4) applies (3) Subsection (4) applies for a trust that is a foreign trust at the time a distribution to a beneficiary is made. Taxable distributions: foreign trusts (4) The distribution is a taxable distribution to the extent to which it is not a distribution of— (a) beneficiary income; or (b) a part of the corpus of the trust; or (c) a profit from the realisation of a capital asset or another capital gain; or (d) a payment or a transaction that represents a distribution of either the corpus of the trust referred to in paragraph (b) or a capital gain referred to in paragraph (c). Determining amount of gain (5) For the purposes of subsection (4)(c),— (a) the profit does not include— (i) a gain that must be taken into account for the purposes of determining an income tax liability; or (ii) a capital gain derived by the trustee through a transaction or series of transactions between the trustee and a person associated with them: (b) the amount of the profit is determined after subtracting any capital loss that the trustee incurs in the income year in which the amount was derived. Amounts not subject to ordering rule (6) To the extent to which a distribution is made from a trust that is not a complying trust by disposing of property at less than market value or providing services to a beneficiary at less than market value, the distribution is a taxable distribution and is not subject to the ordering rule in section HC 16 . Inadequate records (7) If the records of a trust that is not a complying trust do not allow an accurate determination of the elements of a distribution under section HC 16 , the distribution is a taxable distribution. Defined in this Act: amount , associated person , beneficiary income , complying trust , corpus , distribution , foreign trust , income tax liability , income year , non-complying trust , pay , superannuation fund , taxable distribution , trustee , Compare: 2004 No 35 ss HH 6(2)(c), (3) , OB 1 “ taxable distribution ” Section HC 15(5)(a)(ii): substituted, on 1 April 2010 (applying for the 2010–11 and later income years), by section 262(2) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34). Section HC 15 list of defined terms 1973 version provisions : repealed, on 1 April 2010, by section 594 of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34). Section HC 15 list of defined terms 1988 version provisions : repealed, on 1 April 2010, by section 594 of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34). Section HC 15 list of defined terms 1990 version provisions : repealed, on 1 April 2010, by section 594 of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).