Income Tax Act 2007 section 1012

Relationship between rules on highest part of total income

Section 1012 establishes a priority order for the various rules that treat particular types of income as the highest part (top slice) of a person's total income for income tax purposes.

• When more than one rule requires different types of income to sit at the top of a person's total income, this section sets out which rule takes priority
• The top-priority list, in descending order, is: life insurance gains, settlor-interested settlement payments, employment termination payments, and then savings and dividend income
• These four categories all take priority over anti-avoidance provisions (such as transactions in land or sales of occupation income) and any other "highest part" rules in the Income Tax Acts
• This section does not apply to the top slicing relief calculations for life insurance gains under sections 535 to 537 of ITTOIA 2005, which have their own separate rules