If you are not a tax resident of New Zealand and have a New Zealand trust with New Zealand resident trustees, you may be subject to the IRD’s new foreign trust registration and disclosure rules.
These rules are in place as a result of concerns around the use of foreign trusts following the 'Panama Papers' publicity. The IRD have moved to make sure that they obtain and pass on significant information in relation to foreign trusts.To provide some brief background, a foreign trust is a trust where no person who has made a settlement on the trust has been a tax resident of New Zealand during the lifetime of the trust. This means your typical foreign trust is one that is set up and funded by individuals who are not tax resident at the time the trust was set up and have not become tax resident since. One of the main benefits of a foreign trust is that foreign income is not subject to tax in New Zealand.
Under the new rules, all foreign trusts in existence currently have to be registered by 30 June 2017. Registration involves provision of a copy of the trust deed, extensive details of settlors, trustees and holders of the power to appoint and remove beneficiaries, details of any settlements made on the trust and details of beneficiaries, as well as payment of a $270 fee to the IRD. There is also an annual filing obligation which will see financial statements needing to be filed, along with details of any settlements and distributions, and payment of a $50 fee.
Following this, if you have a trust and set it up at time when you were not tax resident of New Zealand and no person who has provided any value or gifted to the trust has become a tax resident since, then you may have a foreign trust and you should contact us immediately to determine if the new registration and annual filing rules apply to you.
Please contact us at GRA for assistance if you think these new rules might apply to you - phone us on +64 9 522 7955 or email us at firstname.lastname@example.org.