Tax credits of trustees

2012 amendment ensures a trustee may use tax credits such as imputation credits to satisfy the trustee's income tax liability in relation to trustee income.

As originally enacted in the 2007 Act, section HC 24(2) prevented a trustee from using any tax credits to satisfy its income tax obligations.

The Rewrite Advisory Panel agreed with a submission that this was an unintended change as the 2004 Act did not prevent a trustee from using imputation credits (or other credits under Part L of the 2004 Act) to satisfy its income tax liability in relation to trustee income. The restriction on the use of tax credits in the 2004 Act was to prevent the trustee from obtaining personal tax credits, such as the low income earner rebate and the rebate for charitable donations.

Section HC 24(2) has been amended to ensure that a trustee may use tax credits, such as imputation credits, to satisfy the trustee’s income tax liability in relation to trustee income.

The amendment also ensures that section HC 24 continues to prevent a trustee from using a tax credit referred to in either subpart LC or subpart LD.