The new Trust Act 2019 is now in force. As such, Trustees must now advise ALL beneficiaries of the Trust that they are beneficiaries and let the beneficiaries know that they may ask the Trustees for information about the Trust.
NEW IRD REPORTING REQUIREMENTS FOR TRUSTS
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 1 April 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
- 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
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.
Over the past year we have spoken to and advised most of our clients that have Trusts — particularly those of which we are a Trustee — about the changes the new act has introduced.
If you are a client and have a Trust and we have not yet had the opportunity to speak to you, please contact us so that we can update you.
We are offering a 30-minute free consultation to both existing and new clients when you contact us in relation to your Trust so please make an appointment so we can ensure you’re up to date with the new law.