At the end of last year, the Government passed the Taxation (Income Tax Rate and Other Amendments) Bill which introduced a top tax rate for individuals of 39% on income earned over $180,000 per annum.
The Act also introduced new disclosure requirements for Trusts. From April 1, 2021, all income-producing Trusts are required to report the following information to IRD annually:
- Financial accounting information, including profit and loss statements and balance sheet items;
- Loans to related parties;
- Information on amounts of distributions and settlements made during the income year (including identifying information for Beneficiaries such as their name, IRD number, date of birth and tax jurisdiction);
- Names and details of Settlors from prior years (if not already disclosed to the IRD); and
- Names and details of each person who, under the Trust Deed, has the power to appoint/dismiss Trustees, to add/remove Beneficiaries, or to amend the Trust Deed.
Non-active Trusts do not need to make disclosure.
A non-active Trust is where:
- The Trustee has made a declaration to the Commissioner of Inland Revenue that the Trust is a non-active Trust; AND
- The Trustee has not:
- Derived any income during the tax year; AND
- Has no deductions; AND
- Has not had any involvement with Trust assets leading to the generation of income for any person or fringe benefits for any employee.
If you are a Trustee of a Trust that does not produce an income you must file a declaration with the IRD to qualify for this non-active trust exemption.
If you need any further information or advice, please contact us.