Income Tax Act 2007 section 645

Charitable trusts etc.

Section 645 excludes charitable trusts and similar bodies from the accrued income scheme when they transfer or receive securities, provided the interest on those securities would qualify for charitable tax exemptions.

• A charitable trust or similar body is treated as an excluded party — both as transferor and as transferee — for the purposes of the accrued income scheme, so long as one of two conditions is met.
• Condition A is met where the person would be entitled to exemption under section 532 if they received interest on the securities and applied it solely for charitable purposes.
• Condition B is met where the person would be entitled to exemption under section 533 if they received interest on the securities and applied it exclusively for purposes such as the repair of college or church buildings.
• Where securities cease to be held on charitable trusts, a deemed transfer occurs under section 652, which may bring the accrued income scheme back into play.