TSEM1112 - Introduction to trusts: types of trusts and settlements: accumulation/discretionary trusts
Use of term ‘accumulation/discretionary trust’
We use the term ‘accumulation/discretionary trust’ to describe any trust where the trustees can accumulate income or pay it at their discretion. This includes
- trusts to accumulate (TSEM1125)
- trusts where the trustees can pay income at discretion
- accumulations and maintenance trusts (TSEM1025)
- mixed trusts (TSEM1115)
Tax consequences
Where the trustees have power to
- accumulate income or
- pay income at discretion or
- accumulate income and pay income at discretion
The trust’s income is chargeable at special rates of tax under ITA/S479.
From 2010/2011 the special trust rates are:-
- 42.5% on dividend type income
- 50% on all other income
For earlier years, see TSEM3041
