Charge of tax where share of beneficiaries unknown - Section 307(New) / Section 164(Old)

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....o persons covered by section 303(1)(c) and (d). Broadly, where: • the income is not specifically receivable on behalf or for the benefit of any one person; or • the individual shares of the beneficiaries are indeterminate or unknown, such income is chargeable to tax at the maximum marginal rate. Section 307(2) - Cases Where AOP Rate Applies Section 307(2) provides exceptions to the maximum marginal rate. The income referred to in section 307(1) is instead chargeable at the rate applicable to an association of persons (AOP), as if such income were the total income of the AOP, where any of the specified conditions are satisfied. Section 307(2)(a) - Beneficiaries with Limited Other Income The ....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

.... Section 307(3) - Business Income of Certain Trusts Section 307(3) contains a special rule where the income relating to the person covered by section 303(1)(d) consists of, or includes, profits and gains of business. The general rule is that such business income is chargeable at the maximum marginal rate. Section 307(4) - Exception for Certain Testamentary Trusts Section 307(4) provides an exception to the maximum marginal rate rule contained in section 307(3). Where the business profits are receivable under a trust: • declared by a person by will; • exclusively for the benefit of a relative dependent upon him for support and maintenance; and • which is the only trust so declared ....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....provision Special charging provision applicable to representative assessees, particularly trustees, where beneficiaries or their shares are not determinate. Substantially the same special charging mechanism under the new Act. Principal persons covered Persons referred to in section 160(1)(iii) and (iv), liable as representative assessees. Persons referred to in section 303(1)(c) and (d). General tax rate Maximum marginal rate. Maximum marginal rate. First exception AOP rate where none of the beneficiaries has income exceeding the specified threshold and none is beneficiary under another trust. AOP rate where none of the beneficiaries has income exceeding the specified thresho....