Commentary on Sections Structure of Chapters Overview Section 660: Basic amount of estate income: absolute interests
2519.This section explains how to calculate the basic amount of estate income for absolute interests. It is based on section 696 of ICTA.
2520.For years before the final tax year, the basic amount is the total of all sums paid in the tax year in respect of the interest or the person’s assumed income entitlement, whichever is the lower. Surplus payments are excluded because an absolute income beneficiary may receive sums which comprise both capital and income but the section taxes only the income element. For the final tax year, it is the person’s assumed income entitlement for that year which is taxed.
2521.This section removes all the deeming of amounts to have been paid in Part 16 of ICTA. Instead, it looks at either amounts actually paid or the assumed income entitlement. It then catches all previously untaxed income due to the absolute interest holder by taxing the assumed income entitlement in the final year. This avoids the two stage process inherent in section 696(5) of ICTA.
2522.Subsection (3) introduces a new rule allowing excess estate deductions in the final tax year to be set off against the basic amount of estate income for that year. See Change 106 in Annex 1.