Income Tax Act 2007 section 563

Rules for attributing excess expenditure to earlier years

Section 563 sets out the rules for attributing a charitable trust's excess non-charitable expenditure for a tax year back to earlier tax years, determining which years qualify and the order and limits of such attribution.

• Excess expenditure can only be attributed to an earlier tax year that ended no more than six years before the end of the current tax year, and only where that earlier year had surplus available income and gains over non-charitable expenditure.
• Where more than one earlier year qualifies, the excess expenditure must be attributed to the most recent qualifying year first, working backwards in time.
• The amount attributed to any earlier year cannot exceed the surplus of that year's available income and gains over its non-charitable expenditure, including any amounts already attributed from previous applications of this rule.
• A transitional provision limits the amount attributable to the year 2005–06 or earlier years so that it cannot exceed what would have been attributed under the method of calculating excess expenditure that applied before the changes introduced by Finance Act 2006.