Section MB 7 — Income Tax Act 2007: Family scheme income of settlor of trust

MB 7 Family scheme income of settlor of trust When this section applies (1) This section applies for the purpose of determining the amount that represents the family scheme income of a person for an income year when the person is the settlor of a trust (the person's trust ) at a time in the income year, other than solely as a result of providing personal services for less than market value in the administration of the trust or the maintenance of trust property. Exception for some trusts (2) This section does not apply if— (a) the trustee of the person's trust is registered as a charitable entity under the Charities Act 2005 : (b) the person's trust is solely for the benefit of a local authority: (c) interest and dividends derived by the trustee of the person's trust would be exempt income of the trustee under section CW 45 (Funeral trusts): (d) the person's trust is a superannuation fund: (e) the person and the members of the person's family are not permitted to benefit from the person's trust except under an order of a court. What is included in family scheme income (3) The person's family scheme income for the income year includes an amount calculated using the formula— trustee + company – dividends settlor number. Definition of items in formula (4) In the formula— (a) trustee is the net income of the trustee of the person's trust for the income year reduced, to not less than zero, by the amount of the trustee's income that vests or is paid by the trustee as beneficiary income for the income year: (b) company is the total of amounts calculated for companies in which, at the end of the company's income year, the trustee of the person's trust and associated persons hold voting interests of 50% or more, or market value interests of 50% or more if there is a market value circumstance, with the amount for each company being calculated by multiplying the company's net income for the income year by the trustee's voting interest or market value interest in the company at the end of the income year: (c) dividends is the total amount, not exceeding the item company, of dividends that are derived by the trustee of the person's trust in the income year from companies referred to in paragraph (b): (d) settlor number is the number of settlors of the person's trust, including the person, for which this section applies. Defined in this Act: amount , beneficiary income , company , dividend , exempt income , family scheme income , income , income year , interest , local authority , market value , market value circumstance , market value interest , net income , settlor , superannuation fund , trustee , trustee income , voting interest Section MB 7: added, on 1 April 2011, by section 112 of the Taxation (GST and Remedial Matters) Act 2010 (2010 No 130).