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Are you a trustee or beneficiary of a Family Trust?


On 1 April 2021 the tax rate for individuals increased to 39% and at the same time the IRD announced that it is going to be taking a more detailed look at transactions between individuals and trusts.

This includes new disclosure rules designed to ensure the Inland Revenue has clear visibility over such transactions whether they are taxable or not.

If your Family Trust own a Family Home or Family Bach and are "non active" for tax purposes they will be exempt from the new rules. (to be exempt the trust needs to pay cost of less that $200 and earn interest of less than $200). You don't need to read any further.

However if your Trust operates outside these limits it will be required to disclose a lot of information to the IRD.

From 1 April 2021 trusts will be required to prepare standard financial statements and to make significant other disclosures.

These include:

  • Details of all settlements on the trust which includes all transfers of value along with full details identifying those entities or individuals making the settlements. Transfers of value include all things monetary and non-monetary other than the value of minor services provided at less than market value.

  • Details of all distributions (whether taxable or not; monetary or non-monetary) including details identifying the recipients.

  • Details identifying those who have the power to appoint or dismiss a trustee, add or remove a beneficiary, or to amend the trust deed.

  • Any other information required by the Commissioner.

The Inland Revenue will be looking at the ways in which individuals benefit from trusts other than through taxable beneficiary distributions.

You can expect revenue authorities to be keen to review this information and identify those who may have tax exposures in their country of tax residence.

Trust transactions may also become more visible to the Ministry of Social Development.

Where Inland Revenue reviews the 2022 Trust Tax Return filed and finds something of concern, they have the right to request the same information for the previous eight years.

Our Recommendations Are:

  • Obtain details from us of the reporting required for the 2022 year as soon as possible.

  • Get our opinion on what that will look like to the IRD.

  • Keeping good trust and financial records and ensure that the trustees decisions are documents clearly.

  • Be very aware of making any trustee decisions that are just for the purpose of minimizing tax – this could be called tax avoidance.

If you want further advice, book a time here:


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