Trust Reporting
We have for some time now kept you updated on the new Trust Act 2019 legislation which came into force on 30 January 2021, modernising the previous legislation (being the Trust Act 1956). The new requirements now bind Trustees by mandatory and default duties and require certain information to be held and available amongst other changes. With this comes a task to ensure your Trust Deed remains fit for purpose which either your lawyer or ourselves can assist you with, if you have not already had the opportunity to do so. Here at Bennetts Proactive we have recently introduced a specialist team to ensure this happens in 2022/2023.
In addition to the Trust Act 2019 legislation, we also have new reporting requirements for domestic Trusts in NZ for Inland Revenue Department purposes. These new reporting requirements become effective for the 2022 Income Tax year and include:
Disclosures need to detail a summary of the profit or loss and the Balance Sheet (in addition to the IR10 that is already required);
Details of gifts to the Trust that have occurred during the year or that have not previously been disclosed to the IRD. This could also include services provided with either no monetary value or reduced values;
Details of distributions to beneficiaries that have taken place during the year;
Details of all persons that hold the Power of Appointment or the ability to modify the Trust Deed.
Exemptions from the reporting requirements allow for non-active Trusts to be excluded, however, a non-active Trust declaration must be completed. A non-active Trust is one that has no business activity, just holds non-income earning investments, but can have interest of $200/year or less. Other exemptions include Trusts such as those classified as Foreign Trusts, Charitable Trusts or a Maori Authority.
So long story short, all eyes are on Trusts. While this comes with additional compliance don’t be too alarmed. Trusts still remain a very relevant structure when considering asset protection and ease of succession administration or planning. Our review process this year will make sure all requirements are smoothly complied with to ensure that your Trust is fit for purpose and worthwhile.
