Income Tax Act 2007 section 439

Meaning of "disposal-related obligation"

Section 439 defines what counts as a "disposal-related obligation" in relation to a qualifying investment gifted to a charity, which is relevant because such obligations can reduce the tax relief available on the gift.

• An obligation is "disposal-related" if either it was effectively a precondition for the gift being made (Condition A), or it relates to or is conditional on the charity receiving the gifted asset or a connected asset (Condition B)
• The obligation can be owed to anyone — not just the donor or persons connected with them — and includes informal arrangements and understandings, even if they are not legally enforceable
• A "disposal-related investment" is broadly defined to include assets of the same class as the gift, assets derived from or representing the gift, and assets from which the gift itself was derived
• When assessing Condition A, all circumstances must be considered, including in particular the difference between the net benefit to the charity calculated with and without the obligation