Section 494 — Income Tax Act 2007: Grossing up of discretionary payment and payment of income tax

Grossing up of discretionary payment and payment of income tax 494 1 The discretionary payment is treated as if it were made after the deduction of a sum representing income tax at the trust rate on the grossed up amount of the discretionary payment.

2 The grossed up amount of the discretionary payment is the actual amount of the discretionary payment grossed up by reference to the trust rate.

3 The person mentioned in subsection (4) is treated as having paid income tax of an amount equal to the sum deducted as mentioned in subsection (1).

4 That person is—

a if condition A in section 493 is met, the beneficiary, and b if condition B in section 493 is met, the settlor.