GRA Blogs

Articles by Anthony Strevens

IRD Requiring More Trust Information

AUTHOR: Anthony Strevens

POSTED: 29 June 2021

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.

Request a Meeting

Anthony Strevens
Partner

09 522-7955

anthonys@gra.co.nz

© Gilligan Rowe & Associates LP

Did you like this article? Subscribe to our newsletter to receive tips, updates and useful information to help you protect your assets and grow your net worth. We're expert accountants providing expert advice to clients in NZ and around the world.

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.

Comments

Testimonials

Hi Matthew, my name is Mark Soster and I would just like to congratulate you on your wonderful book Property 101. A few weeks ago I had a "financial awakening" and began devouring all the books I could find on the subject, however I keep coming back to yours. After 3 reissues from the library I think it easier now just to buy it. Wonderfully simple yet complex enough to require multiple reads and note taking. It has taken a lot of the fear away with regards to property investment but also tempered me with caution. Without it I would probably have stupidly invested anywhere but Auckland, telling myself it’s too expensive, I now appreciate why would you invest anywhere else? The numbers never lie, in a 20 year plan then Auckland is King for capital gain. As a fan of maths (the only perfect thing on earth?) I can see how each opportunity can be ruthlessly examined on a purely financial level. Anyway, thanks again, I will definitely be contacting your company with regards to coaching and expertise. - Mark Soster - October 2017

Seminars and workshops for property investors, business owners and anyone seeking to create and protect their wealth.

View all our upcoming events

Learn More

Investing in residential property?

Put this at the top of your reading list.

If you're investing in residential property, seeking to maximise your ability to succeed and minimise risk, then this is a 'must read'.

Matthew Gilligan provides a fresh look at residential property investment from an experienced investor’s viewpoint. Written in easy to understand language and including many case studies, Matthew explains the ins and outs of successful property investment.