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Anthony Strevens

IRD Requiring More Trust Information


As part of the increase in the top individual tax rate to 39%, the government has brought in the requirement to provide Inland Revenue more information in your trust tax returns. This applies from the 2022 tax year onwards.

They have done this to ensure that Inland Revenue will have plenty of information in order to decide whether or not to investigate situations where they believe there may be re-structuring of assets into trusts purely for tax advantages (i.e. tax avoidance).

This will mean that the costs of preparing trust tax returns and financial information are likely to increase for any trusts that don’t already produce a full set of financial statements including a profit and loss report and a balance sheet.

The following extra information will be required:

•  Statement of profit and loss

•  Statement of financial position

•  Amount and nature of each settlement (a settlement is where someone provides something of value to the trust without any consideration or payment)

•  Details of each settlor (the person making the above settlement plus the named settlors)

•  For each distribution from a trust, the amount of the distribution and the details of the recipient beneficiary

•  Details of each person with powers to amend the trust/appoint trustees/add beneficiaries

•  Other information required by the Commissioner

There are various exemptions from this. However, most of these exemptions will not be relevant for a standard family/business/holding trust being utilised for asset protection by many New Zealanders. The main exemption that could apply is where your trust is “non-active”. If your trust is not deriving any taxable income, then it can elect to be “non-active” with IRD and therefore not required to file tax returns. If your trust is currently filing tax returns but you think it could fit the description of non-active, now is a good time to investigate this with your Client Services Manager (or contact GRA if you’re not already a client).

The actual forms and returns don’t yet exist, so to some extent we are still yet to see exactly how detailed the information required will be. However, if you are a trustee of a NZ trust then watch this space and start ensuring that you’re keeping good records for your trust – which you probably should be doing as a trustee anyway. 

Anthony Strevens
Anthony Strevens
Business Advisory Director
© Gilligan Rowe & Associates LP

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Disclaimer: This article is intended to provide only a summary of the issues associated with the topics covered. It does not purport to be comprehensive nor to provide specific advice. No person should act in reliance on any statement contained within this article without first obtaining specific professional advice. If you require any further information or advice on any matter covered within this article, please contact the author.

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