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Section 11

Trust income, etc. deemed income of trustee, beneficiary, etc. 

(1)Any income chargeable to tax under this Act received by a person in his capacity as a trustee, executor or administrator shall be deemed to be income of that trustee, executor or administrator.  

(2) Where an amount included in the income of the trustee, executor or administrator under subsection (1) consists of qualifying dividends or qualifying interest, that amount shall be deemed to be an amount chargeable to tax under section 3(2)(b) and not section 3(2)(e). 

(3) Any amount, received as income in a year of income by a person beneficially entitled thereto from a trustee in his capacity as trustee, or paid out of income by the trustee on behalf of that person, shall, subject to this Act, be deemed to be income of that person, and to the extent that any such amount is received or so paid out of income chargeable to tax under this Act on that trustee it shall be deemed to be income - 
  • (a) in any case other than that of an annuity directed to be paid free of tax - 
    • (i) of such gross amount as would, after deduction of tax at the rate paid or payable on that income by the trustee, be equal to the amount received or so paid; and 
    • (ii) that has borne tax at that rate;
  • (b) in the case of an annuity directed to be paid free of tax, of such gross amount as is equal to the amount of the annuity together with the amount of the sums paid by the trustee to the annuitant to meet the liability of the annuitant to tax on the annuity. 
(3A*) In the case of a registered trust, sub-section(3) shall only apply to—
  (a) any amount that is paid out of the trust income on behalf of any beneficiary and is used exclusively for the purpose of education, medical treatment or early adulthood housing;
  (b) income paid to any beneficiary which is collectively below ten million shillings in the year of income;
  (c) such other amount as the Commissioner may prescribe from time to time and at such rate as prescribed in paragraph 5 of the Third Schedule
(Finance Act 2021- wef-01July2021*)  3A-Deleted by (Finance Act 2023 wef 1st-July-2023 s8)
(4) The trustee, executor or administrator may designate a part or all of the amounts paid by him to a person that is chargeable to tax under subsection (2) to be qualifying dividends or qualifying interest and, in that case, such designated amount shall be deemed to have been already tax paid. 

(5) The cumulative totals, at any time, of the amounts designated up to that time by a trustee under subsection (4) as qualifying dividends or qualifying interest shall not exceed the cumulative totals of qualifying dividends or qualifying interest, respectively, received by the trustee, in his capacity as a trustee, after the 31st December, 1990 and up to that time.


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