Income Tax Act 2007 section 484

Trustees' expenses to be set against trustees' trust rate income

Section 484 sets out how allowable expenses incurred by trustees of a settlement can be set against trust rate income, thereby reducing the amount of income subject to the special higher trust tax rates.

• Allowable expenses incurred by trustees in a tax year are set against the trustees' trust rate income for that year, following the ordering rules in section 486
• Where expenses are set against trust rate income, that portion of income is taxed at the normal rates (basic rate, dividend ordinary rate, etc.) rather than the special trust rates
• Expenses qualify as allowable only if they are expenses of the trustees and are properly chargeable to income (disregarding the express terms of the settlement)
• Expenses that have already been taken into account in calculating the trustees' income tax liability for any tax year cannot also be treated as allowable expenses under this provision