Income settled on children.
(1)
Where, under a settlement, income is paid during the life of the settlor to or
for the benefit of a child of the settlor in a year of income, that income
shall be deemed to be income of the settlor for that year of income and not
income of any other person: Provided that this subsection shall not apply to
any year of income in which -- (i) the income so paid does not exceed one hundred shillings; or
- (ii) the child attains the age of
nineteeneighteen years.
(2)
For the purposes
of, but subject to, this section -- (a) income which is dealt with under a settlement so
that it, or assets representing it, will or may become payable or
applicable to or for the benefit of a child of the settlor in the future
(whether on the fulfilment of a condition, or the happening of a
contingency, or as the result of the exercise of a power of discretion, or
otherwise) shall be deemed to be paid to or for the benefit of that child;
- (b) income so dealt with which is not required by the
settlement to be allocated, at the time when it is so dealt with, to any
particular child or children of the settlor shall be deemed to be paid in
equal shares to or for the benefit of each of the children to or for the
benefit of whom or any of whom the income or assets representing it will
or may become payable or applicable;
- (c) in relation to a settlor, only income originating
from that settlor shall be taken into account as income paid under the
settlement to or for the benefit of a child of the settlor.
(3)
Where under
subsection (1) tax is charged on and is paid by the person by whom the
settlement was made, that person shall be entitled to recover from a trustee or
other person to whom the income is payable under the settlement the amount of
the tax so paid, and for that purpose to require the Commissioner to furnish to
him a certificate specifying the amount of the tax so paid, and a certificate
so furnished shall be conclusive evidence of the facts appearing therein.(4)
Where the amount
of the tax chargeable upon a person for a year of income is, by reason of
subsection (1), affected by tax deducted from the income under Head B of Part VI, the amount by
which the tax is affected shall, if the amount of tax is thereby reduced, be
paid by him to the trustee or other person to whom the income is payable under
the settlement or, where there are two or more of them, shall be apportioned
among those persons as the case may require; and if any question arises as to
the amount of a payment or as to an apportionment to be made under this
subsection, that question shall be decided by the Commissioner whose decision
thereon shall be final.(5)
Income which is
deemed under this section to be the income of a Person shall be deemed to be
the highest part of his income.(6)
This section
shall apply to every settlement, wheresoever it was made or entered into and
whether it was made or entered into before or after the commencement of this Act,
except a settlement made or entered into before 1st January, 1939, which
immediately before that date was irrevocable, and shall (where there is more
than one settlor or more than one person who made the settlement) have effect
in relation to each settlor as if he were the only settlor.(7)
In this section
–(a)
"child" means a child under the age of nineteen eighteen
years and includes a step-child, an adopted child and an illegitimate child;
(b)
"settlement" includes any disposition, trust, covenant, agreement,
arrangement, or transfer of assets through a registered family trust or*, but does not include a disposition, trust,
covenant, agreement, arrangement, or transfer of assets, resulting from an
order of a court unless that order is made in contemplation of this provision; (Finance Act 2021- wef-01July2021)*
(c)
"settlor", in relation to a settlement, includes a person by whom the
settlement was made or entered into directly or indirectly, and a person who
has provided or undertaken to provide funds directly or indirectly for the
purpose of the settlement, or has made with another person a reciprocal
arrangement for that person to make or enter into the settlement;
(d) references
to income originating from a settlor are references to -
- (i) income from property originating from that settlor; and
- (ii) income provided directly or indirectly by that settlor;
(e)
references to property originating from a settlor are references to -
- (i) property which that settlor has provided directly or
indirectly for the purposes of the settlement; and
- (ii) property representing that property; and
- (iii) so much of any property which represents both property so
provided and other property as, on such apportionment as the Commissioner
may determine to be just and reasonable, represents the property so
provided;
(f)
references to:
- (i) property or income which a settlor has provided directly or
indirectly include references to property or income which has been
provided directly or indirectly by another person in pursuance of
reciprocal arrangements with that settlor but do not include references to
property or income which that settlor has provided directly or indirectly
in pursuance of reciprocal arrangements with another person;
- (ii) property which represents other property include references to property, which represents accumulated income from that other property.
(8)
Where, under
this section, income is deemed to be income of the settlor, it shall be deemed
to be income received by him as a person beneficially entitled thereto under
the settlement.
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