New Zealand Parliament is enacting a bill that would mean changes to rules for foreign trusts. The new bill aims to establish the following Foreign Trust Disclosure Rules.
Under the new foreign trust rules, a New Zealand citizen trustee of a foreign trust must enroll with New Zealand Inland Revenue and pay a NZ$270 as registration fee. On registration, the trustee must furnish specific data to the IR.
Along with the name of the trust, the trustee must provide the following information:
- A copy of the deed of the trust,
- Any document amending the deed;
- From the date that the trust was formed, the trustee company must provide details of each settlement of assets on the trust, such as amount and date of each settlement, nature of each settlement, and identification of the person that made the settlement;
- The name, email address, physical residential or business address, the jurisdiction of tax residence, taxpayer identification number of each:
- a person who possesses or controls any of the following authority: the authority to select and eliminate trustees, change the trust deed or include or exclude beneficiaries;
- trustee who manages the administration of a trust;
- beneficiary owning a fixed interest in; a trust
- A form of declaration trustee registering the trust that the persons above have been notified of and consent to give the information required to comply with the Tax Administration Act 1994 and the Anti-Money Laundering and Countering Financing of Terrorism Act 2009 and its regulations;
- For a discretionary trust, details of each beneficiary or class of beneficiaries sufficient to decide on a distribution whether a person is a discretionary beneficiary.
Foreign Sourced Income and Tax Exemptions
Under the new laws, to get a tax privilege on foreign-sourced income, foreign trust must meet specific compliance commitments. A trustee must be registered to the trust and file an annual return with the New Zealand Inland Revenue and maintain the important trust records under the TA Act 1994.
A New Zealand foreign trust must file a return annually and pay an annual fee of NZ$50. The return must be filed by 6 months after the trust’s balance date annually or, if the trust does not have a balance date, on 30 September each year. Each year return must include:
- If the trustee prepares or is required to prepare financial statements then provide a financial statement for the trust;
- If required for the primary disclosure of settlements upon registration of the trust, then provide details of any further settlements on the trust in that year;
- Fundamental details about any distributions to any beneficiary during that year;
- Personal information of tax residence and taxpayer, identification number of the beneficiary or beneficiaries obtaining distributions in that year.
Time limits for registration
New trusts must register within 30 days of formation or a New Zealand trustee being appointed.