Last year we explained possible changes that could be introduced to the New Zealand Foreign Trust (“NZFT”) Industry. A link to our previous article is here.
We can now update you that the proposed changes have been passed by the New Zealand parliament on 14 February in The Taxation (Business Tax, Exchange of Information and Remedial Matters) Bill, which is now awaiting Royal Assent.
The main impact of the changes for anyone who is a trustee of a NZFT is the new disclosure requirements for all NZFTs.
Currently all NZFTs have to notify the Inland Revenue Department basic information on establishment. The changes being introduced will increase the information that needs to be provided to the IRD. All NZFTs will now need to register with the IRD and provide the following information:
-
Name of the Trust;
-
The date and detail of each settlement on the trust;
-
Details of every settlor of the Trust;
-
Details of every person who holds powers to change the trustees, change the beneficiaries or amend the trust deed;
-
Details of any persons able to exercise control over the Trust;
-
Details of all trustees;
-
For a fixed trust, details of each beneficiary;
-
For a discretionary trust, details of each class of beneficiary;
-
A copy of the trust deed; and
-
A Trust annual return, including financial statements, if these are prepared by the Trustee and details of any distributions made.
Trustees must also ensure that they provide information to settlors, appointors and controllers of NZFTs on the requirements imposed by certain tax and anti-money laundering laws in New Zealand and will need to confirm that they have done this to the IRD on registration.
A fee of $270 will be payable on the initial registration and then a fee of $50 will be payable every year by the NZFT trustees.
Importantly for any clients who are the trustee of a NZFT, all existing NZFTs must register with the IRD no later than 30 June 2017. Trustees must also take care to update the IRD of any changes to the information provided within 30 days of a change being made. Any new NZFTs must register within 30 days of establishment.
As noted in our previous article, while the changes appear dramatic, they are part of an ongoing global effort to ensure better global tax transparency and importantly, while NZFTs will be registered, there will be no public accessible register of NZFTs. Disclosure of the trust information will only be made available to the New Zealand Police or Department of Internal Affairs. Ultimately, the changes cement New Zealand’s reputation as a reputable white-listed jurisdiction for trusts and estate planning.
If you are the trustee or settlor of a NZFT and are unsure of your next steps, please do not hesitate to get in touch with Bethan Boscher by email bethan.boscher@morrisonkent.co.nz or call (09) 915-5458.
Disclaimer – this article prepared by Bethan Boscher (a Solicitor at JB Morrison, Auckland) is intended to provide a general overview of the area of law only. It is not exhaustive, does not purport to cover all details and should therefore not be relied upon exclusively or be construed as personal advice.
