If you want to understand Bendel, you need to understand Ward VIRC. This session continues our work on present entitlement, and looks at what it means for a trustee to “apply” trust income. The text is Commissioner of Inland Revenue (NZ) v Ward [1970] NZLR 1. A trustee resolved that a year’s income “be held for the credit of” four infant children; nothing was paid out, and the resolution was recorded in the trust’s books only after the end of the income year. The question was whether that was enough to “apply” the income to the children so that they were presently entitled to it.
We will work through the three judgments and the questions they divide on: whether a mere crediting in the accounts is enough; whether the application must be complete before the end of the income year; and whether an application requires the creation of a debtor-creditor relationship or a separate trust.
Required Reading:
Please read the three judgments closely and come prepared to discuss those questions.
Discussion led by Adrian Cartland