Commentary on Sections Overview Overview Section 511: Prevention of double taxation: reimbursement of settlor
1527.This section prevents a double charge to income tax that may arise if the settlor is carrying on a trade. It is based on section 692 of ICTA.
1528.The source legislation (section 692(1) of ICTA) refers to expenditure that “is (or would apart from the reimbursement be) deductible in computing … profits”. The bracketed words have been omitted from subsection (1)(c) because the amount reimbursed is, strictly, income of the business that is ignored in computing profits. It does not cancel the real expenditure, which in principle remains allowable.