Income Tax Act 2007 section 498

Types of income tax for the purposes of section 497

Section 498 identifies the specific types of income tax that qualify to be added to the trustees' tax pool as part of the Step 2 calculation in section 497.

• Tax charged at the dividend trust rate or the trust rate on trust income (other than life insurance gains covered by Type 3A) forms the main entry into the tax pool (Type 1)
• For life insurance gains where trustees are taxed at the trust rate but basic rate tax is treated as already paid, only the additional tax (the difference between the trust rate and the basic rate, known as the "nominal rate") enters the pool (Type 3A)
• Tax on income of trusts for vulnerable persons, calculated under special relief rules, forms a separate category entering the pool (Type 5)
• Income that benefits from the vulnerable persons trust relief is excluded from Types 1 to 4 to prevent double counting in the tax pool