Income equalisation scheme: Special circumstances
If an individual dies any deposits will be refunded to the trustee of their estate. If a refund is made then it must be included as income in the tax year the individual died.
The trustees can elect to either have the deposits allocated to the income year in which the deposits were originally received. In this case the refund will be income in the year allocated to.
Alternatively the trustees can elect to allocate the deposits to a time not later than the 5 year expiry date of the deposit or the end of 3 years after the death of the taxpayer, whichever is the earlier. Income is derived by the trustee in the year the deposit is allocated.
If an individual retires any deposits are refunded and then included as income in the tax year the taxpayer retires.
A request can be made in writing to have the deposits allocated to the income year the deposits were originally made in which case the refund will be income in those years. The request must be received by the due date of the return in the year of retirement.
Any deposit held at the date Inland Revenue is notified of bankruptcy, including any excess of the maximum is refunded to the Official Assignee.
Any amount refunded to the Official Assignee is included as gross income derived by the taxpayer immediately before bankruptcy.
If a company goes into liquidation either by court order or voluntarily, any deposits held by Inland Revenue in the companies main account is refunded to the taxpayer as at the date of notification. The refund is deemed to be income derived by the taxpayer immediately before the liquidation.
Date published: 06 Jul 2005
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