In April 2022 the Government proposed new trust disclosure rules. These new rules were then passed into law 5 days later. The new rules allow the Inland Revenue to collect consistent data so that they can see to what extent there may have been an increase in the use of trusts following the introduction of the 39% personal tax rate for income in excess of $180,000 in 2021. Additionally, the IRD will also be able to share the disclosed information with New Zealand government departments and overseas tax authorities.

From the 2021 – 2022 income year, trustees will need to provide additional information about a trust’s earnings, financial position, settlements, settlors, distributions, beneficiaries, and powers of appointment.

Who needs to comply?

All trusts who receive income in a year will need to comply with the new rules and provide additional information when they file their return.

The only trusts that are excluded are:

• non active complying trusts (that have filed an IR633 non active trust declaration)
• foreign trusts
• charitable trusts
• trusts that are eligible to be Maori Authorities
• widely-held superannuation funds
• exempt employee share schemes
• debt funding special purpose vehicles
• energy lines trusts.

Additional disclosures

The additional disclosures required for trusts in the IR6 are:

• A statement of financial position
• A statement of profit or loss
• The amount and nature of settlements received; these do not need to be disclosed if they are minor services incidental to the activities of the trust and are provided to the trustee at less than market value
• Settlor details, including those of previous settlors if they haven’t been supplied previously to the Commissioner
• The amount and nature of distributions made
• Details of beneficiaries who received capital and/or income distributions
• Details of people who have the power to appoint or dismiss a trustee, to add or remove a beneficiary, or to amend the trust deed

Financial statements 

In addition to the above disclosures, from 31 March 2022 all trusts will also have to prepare financial statements. While these financial statements are not filed with the IR6, they must be available if Inland Revenue requests to see them.

This is only a summary of the key information Inland Revenue will require under the new disclosure rules, and not a comprehensive list. Further information can be found on IRD’s website.