If you are a New Zealand resident and trustee of a foreign trust (also known as a ‘resident foreign trustee’) you must register the foreign trust with Inland Revenue and disclose certain detailed information.
Foreign trusts also have annual filing obligations. An annual return must be filed with Inland Revenue within six months of balance date. The annual return also requires the disclosure of detailed information about the trust.
Below is a thorough checklist to act as a guide to ensure the correct administration of foreign trusts.
What happens if my foreign trust doesn’t meet the annual disclosure obligations?
If a New Zealand foreign trust is not registered or does not meet annual disclosure obligations, the trust will lose its exemption from New Zealand tax on foreign sourced income.
A resident foreign trustee must keep records relating to each foreign trust for New Zealand tax purposes for at least seven years. Inland Revenue may request these. If requested, the records must be such that Inland Revenue can determine the financial position of the trust. Failure to comply with the requirements may attract penalties.
The tax position for a trustee of a foreign trust can be complicated. The team at Walker Wayland can help clarify your obligations as a trustee and the tax implications.