Section HC 27 — Income Tax Act 2007: Who is a settlor?

HC 27 Who is a settlor? When this section applies (1) This section applies for the purposes of— (a) the trust rules; and (b) the consolidation rules; and (c) section CW 59 (New Zealand companies operating in Niue); and (cb) section MB 7 (Family scheme income of settlor of trust); and (d) section YA 1 (Definitions), the definition of settlement ; and (e) subpart YB (Associated persons and nominees) as modified by section YB 10 (Who is a settlor?). Meaning of settlor (2) A settlor of a trust is a person who, at any time,— (a) transfers value— (i) to the trust; or (ii) for the benefit of the trust; or (iii) on terms of the trust: (b) provides financial assistance to the trust or for the benefit of the trust with an obligation to pay on demand, and the right to demand is not exercised or is deferred: (c) is treated as a settlor under section HC 28 . Trusts for retirement benefits for employees (3) Despite subsection (2), a person resident in New Zealand who makes a settlement on a trust as an employer for the benefit of 1 or more employees is not a settlor of the trust if the following circumstances apply: (a) the trust is established or created mainly to provide retirement benefits to natural persons; and (b) the trust is neither a foreign superannuation scheme nor a superannuation fund. Employee share purchase agreements (3B) Despite subsection (2), an employer is not a settlor for the purposes of the trust rules in relation to a payment made by them to the trustee of an employee share purchase agreement if— (a) some or all of the payment is used by the trustee to acquire shares under the terms of the employee share purchase agreement; and (b) an amount that is less than or equal to the payment used by the trustee would be income of an employee under section CE 1(d) . Indirect settlement (4) A person may make the transfer or provision in subsection (2) directly or indirectly, or by 1 transaction or a number of transactions, whether connected or otherwise. Nil value of beneficiary relationship (5) The fact that a person is, or will become, a beneficiary of a trust does not constitute the giving or receiving of value. Defined in this Act: amount , assessable income , Commissioner , consolidation rules , employee , employer , foreign superannuation scheme , income , pay , resident in New Zealand , settlor , share , share purchase agreement , superannuation fund , transfer of value , trust rules , trustee Compare: 2004 No 35 ss HH 1(10) , OB 1 “ settlor ” Section HC 27(1)(cb): inserted, on 1 April 2011, by section 79 of the Taxation (GST and Remedial Matters) Act 2010 (2010 No 130). Section HC 27(1)(e): substituted, on 1 April 2010, by section 264(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34). Section HC 27(3): substituted (with effect on 1 April 2008), on 6 October 2009, by section 264(2) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34). Section HC 27(3B) heading: inserted (with effect on 1 April 2008), on 7 December 2009, by section 44(1) of the Taxation (Consequential Rate Alignment and Remedial Matters) Act 2009 (2009 No 63). Section HC 27(3B): inserted (with effect on 1 April 2008), on 7 December 2009, by section 44(1) of the Taxation (Consequential Rate Alignment and Remedial Matters) Act 2009 (2009 No 63). Section HC 27 list of defined terms amount : inserted (with effect on 1 April 2008), on 7 December 2009, by section 126 of the Taxation (Consequential Rate Alignment and Remedial Matters) Act 2009 (2009 No 63). Section HC 27 list of defined terms assessable income : inserted (with effect on 1 April 2008), on 7 December 2009, by section 126 of the Taxation (Consequential Rate Alignment and Remedial Matters) Act 2009 (2009 No 63). Section HC 27 list of defined terms Commissioner : inserted (with effect on 1 April 2008), on 7 December 2009, by section 126 of the Taxation (Consequential Rate Alignment and Remedial Matters) Act 2009 (2009 No 63). Section HC 27 list of defined terms income : inserted (with effect on 1 April 2008), on 7 December 2009, by section 126 of the Taxation (Consequential Rate Alignment and Remedial Matters) Act 2009 (2009 No 63). Section HC 27 list of defined terms share : inserted (with effect on 1 April 2008), on 7 December 2009, by section 126 of the Taxation (Consequential Rate Alignment and Remedial Matters) Act 2009 (2009 No 63). Section HC 27 list of defined terms share purchase agreement : inserted (with effect on 1 April 2008), on 7 December 2009, by section 126 of the Taxation (Consequential Rate Alignment and Remedial Matters) Act 2009 (2009 No 63). Section HC 27 list of defined terms trustee : inserted (with effect on 1 April 2008), on 7 December 2009, by section 126 of the Taxation (Consequential Rate Alignment and Remedial Matters) Act 2009 (2009 No 63).