Under New Zealand’s tax rules, rental income from land belongs to the owner of the
land and it is the owner who must declare the income to Inland Revenue. Where the property is owned by a trustee or trustees, this obligation falls on the trustees because, as a general proposition, where a property is held in a trust, it will be only the trustees, who legally own the land, who have an interest in the land. However, where beneficiaries have some interest in the property, the obligations regarding accounting for income tax can be less clear.
Two recent QWBAs highlight relevant issues and the need to be clear as to who must account for income arising from the exploitation of trust property, and what deductions can be properly claimed.
- QWBA If property held in trust is rented out by the trustees for short-stay accommodation, who should declare the income, and what deductions can be claimed?
- QWBA If property held in a trust is rented out by a beneficiary of the trust for short-stay accommodation, who should declare the income, and what deductions can be claimed?