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Articles by John Rowe.

New Foreign Trust Rules

AUTHOR: John Rowe
Retired Partner, Consultant to GRA

POSTED: 17 June 2017

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 [email protected].

Request a Meeting

John Rowe
Retired Partner, Consultant to GRA

09 522-7955

© 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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Testimonials

This letter is to express my appreciation for the assistance and encouragement of both Anthony Lipscombe and particularly John Heaslip over the last financial year. The period since activating my trading trust has been one of considerable stress, as well as personal development, as I embarked on this as a relative business neophyte with virtually no awareness of the contemporary requirements of running a business, particularly the financial records aspect. During much of this period I have therefore felt considerable out of my depth. However I have been lucky enough to have had the benefit of the advice and support of John Heaslip in rationalizing what was a fairly chaotic set of records of the first year property trading. I am able to say that John in particular, has been unstinting in his attention to my needs and has done so in a manner which has never alluded to my extremely rudimentary grasp of managing a business, or even of being unable to set out a spread sheet properly. The result of the above guidance is that now, although my trading trust would still not be able to operate without the advice of GRA, I do least feel a sense of satisfaction that I have got to my present point without major disaster and that my property trust does now have some kind of firmer basis for any future activities - Name withheld by request

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