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Trusts are not taxed directly. Instead trustee income is taxed to the trustee or the beneficiary (but not both). In some circumstances a settlor can also retain a residual liability for tax as the trust’s economic agent.
The rules regarding the taxation of trusts are complex and have developed over time to counteract attempts to use trusts to distort the incidence of income.
The primary income tax provisions that apply to tax trusts can be found in subpart HC of the Income Tax Act 2007. However, as provisions that apply to trusts either specifically or otherwise, can be found throughout the Income Tax Act, care is required to ensure the obligations of trustees, beneficiaries and settlors are satisfied.
Income
Income derived on account of a trust is either trustee income that is taxable at a flat rate of 33% or beneficiary income, which is taxed at the beneficiary’s marginal rate.
Goods and Services Tax
IS18/02 considers the GST treatment of a distribution made by a GST-registered trading trust to a beneficiary, where that distribution consists of goods forming part of the trust’s taxable activity and provides that where a GST-registered trading trust makes a distribution to a beneficiary for no consideration and that distribution consists of goods forming part of the trust’s taxable activity, it will be an associated supply for GST purposes. This is because the supply is between two associated persons — the trust and the beneficiary.
Matters of Trust 
thanks for the info!
Posted by pwolly | December 19, 2013, 4:11 pm