Section 494 | Grossing up of discretionary payment and payment of income tax

(1)The discretionary payment is treated as if it were made after the deduction of a sum representing income tax at the trust rate on the grossed up amount of the discretionary payment.

(2)The grossed up amount of the discretionary payment is the actual amount of the discretionary payment grossed up by reference to the trust rate.

(3)The person mentioned in subsection (4) is treated as having paid income tax of an amount equal to the sum deducted as mentioned in subsection (1).

(4)That person is—

(a)if condition A in section 493 is met, the beneficiary, and

(b)if condition B in section 493 is met, the settlor.