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Accumulated and discretionary income

Higher 'special' tax rates apply to the income of trusts (but not charitable trusts¹) where that income is accumulated or is payable at the discretion of the trustees (or any other person)².

The discretion of the trustees or any other person can relate to one or more of the following³:

1. Ìý

   (i)ÌýÌýÌýÌý whether, or the extent to which, the income is to be accumulated

2. Ìý

   (ii)ÌýÌýÌýÌý the persons to whom the income is to be paid, and

3. Ìý

   (iii)ÌýÌýÌýÌý how much of the income is to be paid to any person

Income is not treated as accumulated or discretionary income, so the special trust rates do not apply, if:

1. Ìý

   (a)ÌýÌýÌýÌý It is the income of any person other than the trustees before being distributed⁴. This is the case where, for example, the trustees hold property for the benefit of a minor indefeasibly; the trustees hold the trust property on statutory trusts⁵ under which