Income Tax Act 2007 section 509

Change of circumstances during a tax year

Section 509 deals with splitting a tax year into two separate periods when there is a change in the heritage maintenance settlement status partway through the year, allowing separate elections to be made for each period.

• If a heritage direction starts or stops during a tax year, the year is split into two parts — before and after the change — each treated as a separate tax year for election purposes
• Separate elections under section 508(1) can be made for each part of the split year
• A change of circumstances requires that in one part of the year a heritage direction is in effect and settlement income is taxable on the settlor, while in the other part one or both of those conditions no longer apply
• Without this provision, if a heritage direction were not in force for the full tax year, no election could be made for that year at all