Income Tax Act 2007 section 809CZC

Tax charged on income transferred

Section 809CZC imposes an income tax charge where a person transfers income arising from property through a loan or credit transaction, without transferring the property itself.

• Where income from property is transferred under a loan or credit arrangement, and the person is not already taxed on that income under the finance arrangements rules in Chapter 5B, the full amount of the transferred income is subject to income tax.
• The tax charge falls in the tax year when the transfer takes place, and the person who transfers the income is liable to pay the tax.
• Transferring income includes surrendering, waiving or foregoing it — and where credit is given for a property purchase with the buyer's income rights suspended or restricted during the life of the debt, the buyer is treated as surrendering income equal to the amount effectively forgone by obtaining that credit.
• The taxable amount is calculated on the gross income before any deduction of income tax at source, and the charge does not affect the separate tax liability of any other person.