The Issues Log

Section / Provision Income Tax Act 2004

Date Received

The reference to the entire definition of corpus in Section HH 1(7) of the 2004 Act results in any settlement on a trust being deemed to be income of the trustee.

Previously this was limited to specified settlements which give rise to a tax preference or advantage (e.g. an income tax deduction for the settlor).

This would appear to be an unattended consequence of the re-write which can be corrected simply by limiting section HH 1(7) to the specific settlements described in paragraphs (c) to (f) of the definition of corpus.

HH 1(7)

The Panel considers that an unintended legislative change has arisen in respect of section HH 1(7) of the ITA 2004.

The unintended legislative change identified has been remedied by the amendment of section HH 1(7) in the Taxation (Base Maintenance and Miscellaneous Provisions) Act 2005.