Here's a question from Mr Warren H. from Christchurch:
"Am I required to have financial statements completed for all Trusts or just for Business Trusts"?
Thanks Warren T.
Trustees may also have to prepare and file GST returns. Trustees need to remember that they are personally liable for the affairs of the Trust and this includes paying any taxes that are due to the Inland Revenue Department.
Good record keeping, including having bank statements evidencing transactions the Trust has engaged in, is crucial to preparing accurate financial statements from which the Trust’s tax returns can be compiled and the Trustees can be made aware of their taxation responsibilities.
Even if a Trust does not produce any income and simply holds passive assets such as a family home, I still recommend financial statements be prepared for the Trust. These type of financial statement will note advances made by the Settlors to the Trust, loans the Trust may have made to other entities, the gifting position, the assets the Trust holds and the liabilities the Trust has incurred. Again, such financial statements help the Trustees satisfy their duty when accounting to the Beneficiaries of the Trust. Reduced accounting fees may well apply for the preparation of these types of financial statements.
Properly prepared financial statements are a great tool that Professional Trustees use to ensure the Trust is being administered correctly and that all Trust documentation is up to date and in place. Without financial statements, this task is severely hampered. Correspondingly, poorly prepared financial statements will be a hindrance to Trustees and in some situations can be very dangerous.
For these reasons, it is important to choose a qualified accountant who is familiar with accounting for Trusts, such as GRA. For readers of this blog, GRA offer free accounting services for the first year for Trusts and Companies. There are however a couple of conditions which will be disclosed to Readers on enquiry.