Changes to reporting requirements for domestic trusts

You may have already received correspondence from Inland Revenue about the changes to the Trust Financial Requirements for 2021/2022. 

This means Trust’s need to disclose information captured in their IR6 returns.  The basic run down is you will be required to tell IRD more information about the Trust’s earnings, financial position, settlements, settlors, distributions, beneficiaries and powers of appointment.  If you are filing an IR6 return you will now need to prepare a statement of profit or loss and statement of financial position.

To comply with the new rules, you will need to complete and disclose the following:

• Your earnings and financial position (assets, liabilities, and equity).
• Details of any settlor of your trust.
• The nature and amount of any settlements made during the year, and the details of the person who made the settlement.
• The details of any beneficiary who has received a distribution during the year, the amount and nature of the distribution, and any movements in the beneficiary’s account.
• Declare any person who has power of appointment for the Trust.

Disclosing information on connected person/s of the Trust will mean you will be required to inform Inland Revenue with personal information on settlors or beneficiaries.  These person/s may not be named on the Trust Deed, so this must be identified and disclosed.

• Name
• Date of birth
• Tax residency jurisdiction
• IRD number/or Tax Identification Number (TIN)

There are some exclusions to the new rules, let’s have a look at what those entail.

Exclusions to the rules are:

• Non-active Trusts
• Foreign Trusts
• Charitable Trusts
• Eligible Māori authority
• Widley-held superannuation funds
• Exempt employee share schemes
• Debt funding special purpose vehicles
• Energy lines Trusts
• An estate, as long as property isn’t being held on trust for beneficiaries

If your Trust only has minor income and expenses for the year, you may be eligible for make a non-active trust declaration.  If you think you fall into one of these categories and need to apply for non-active status, please get in touch.

When changes to compliance requirements crop up it’s always a good time to review if your Trust is still checking the boxes for what you need, or if any issues need addressing.  Perhaps it’s time to decide if a Trust is the right option for you moving forward?  We are able to help with this process and give you advice on your ongoing duties to administer your Trust. 

Have questions?  Get in contact or give us a call on Ph: 03 578 3386 – we can help.