The Taxation of Trusts: Part II
Victoria University of Wellington; Institut für Österreichisches und Internationales Steuerrecht, Wirtschaftsuniversität Wien; Monash University
January 1, 1981
New Zealand Current Taxation, Vol. 25, No. 8, p. 134, January 1981
Trusts fit uneasily into any tax system. The beneficiary should be taxed on any trust income received; yet the trustee also receives income that is amenable to taxation. It would not be fair for the income to be taxed to both the beneficiary and the trustee, yet neither should the trustee escape tax on income that is not paid immediately to the beneficiary.
This article is the second of three that examine the taxation of trusts in New Zealand under the Income Tax Act 1976. See also “The Taxation of Trusts: Part I”  25 New Zealand Current Taxation 109 and “The Taxation of Trusts: Part III”  25 New Zealand Current Taxation 168.
A sub trust is a device commonly used to ensure that the trust income is taxed to the beneficiary but that the trustee retains control. Part II details the taxation of sub trusts and the characteristics that such trusts must have in order to meet the broad test that the application of the trust income is “for the benefit of the beneficiary”.
Number of Pages in PDF File: 9
Keywords: Trust Law, tax law, income tax, beneficiaries, sub trust, benefit
JEL Classification: K34Accepted Paper Series
Date posted: November 17, 2009 ; Last revised: July 11, 2011
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