If the estate or trust received any tax credits and/or income from an LTC write the details at Question 14.
Don’t include any of the following types of income received from an LTC at Question 14:
interest and RWT (include these at Question 9)
any dividends, imputation credits, and dividend RWT (include these at Question 10)
Maori authority distributions and credits (include these at Question 11)
any overseas income and qualifying tax credits attached (include these at Question 13)
rental income (include this at Question 15).
The loss limitation rule limits the amount of deductions an LTC owner (shareholder) can claim if the amount exceeds the owner’s “owner’s basis” (equity) in the LTC.
For the 2017-2018 and later income years, the loss limitation rule only applies to an LTC which is in a partnership or joint venture which includes another LTC.
The estate or trust can now claim the full amount of prior years’ non-allowable deductions brought forward this year.
This won’t apply if the loss limitation rule continues to apply to limit the amount claimable.
The LTC will normally supply information about non-allowable deductions and any other information required to complete your return.
Trust A is an owner of an LTC which is not in a partnership or joint venture that includes another LTC.
For the 2018-2019 income year Trust A has a net loss of $4,000.00 from the LTC.
Trust A also has prior years’ non-allowable deductions brought forward of $5,000.00.
Trust A had no tax credits from the LTC for the year.
Trust A’s tax return should show the following amounts in the following boxes:
14B: $4,000.00 -
14E: $9,000.00 -
In this case the income must be allocated by September 2019.
What to show on your return
Add up all other tax credits received from the LTC and print the total in Box 14A.
Add up all LTC income, deduct expenses not already included elsewhere and print in Box 14B. If a loss, put a minus sign in the last box.
Add up all non-allowable deductions this year and print in Box 14C.
There shouldn’t be non-allowable deductions this year unless the loss limitation rule applies.
Add up all prior year non-allowable deductions claimable this year and print the amount in Box 14D.
You’ll be able to claim the full amount of non-allowable deductions brought forward from last year if the loss limitation rule no longer applies.
If you have an amount in Box 14C, add this to Box 14B and put the total in Box 14E.
If you have an amount in Box 14D, subtract this from Box 14B and put the total in Box 14E.
If you don’t have any amounts in Box 14C or Box 14D, copy the amount from Box 14B to 14E.
Box 14E is your adjusted LTC income.
You can find more information about LTCs in the Look-through companies (IR879) guide.