Income Tax Act 2007 section 485

Carry forward of unused expenses

Section 485 deals with the carry forward of allowable trust expenses that could not be used in the year they were incurred because there was insufficient trust rate income against which to set them.

• Where trustees incur an allowable expense in an earlier tax year but do not have enough trust rate income to absorb it, the unused expense can be carried forward
• The carried-forward expense is treated as if it were incurred in the current tax year, provided two conditions are met
• Condition A requires that the expense went unused solely because the trustees' trust rate income in the earlier year was too low or nil — not for any other reason
• Condition B requires that the expense has not already been relieved against trust rate income in any intervening year through a previous application of this carry-forward rule