A trustee is allowed a deduction for any loss incurred deriving income or in the course of carrrying on a business.  Where losses exceed income, the loss can be carried forward to offset against future income.

However, trustee losses cannot be attributed to any of the trust’s beneficiaries, even where the loss relates to the derivation of beneficiary income.

Any unutilised losses are lost when a trust is wound up. 

Deceased estates

Any losses are lost on death and cannot be passed to the deceased person’s estate.  This is because an estate trust is a different person for tax purposes.

References:

• Income Tax Act 2007, s BC 4, DV 9
• Vicki Ammundsen, Taxation of Trusts, ed 2, CCH New Zealand Limited (2011) chapter 11