Information a Settlor must provide

A New Zealand resident settlor must give Inland Revenue details of any settlement made onto a trust after 17 December 1987 if there is no New Zealand resident trustee, either at the time of settlement, or at any time after the settlement.

Time frame for meeting the information obligations

If there is no resident trustee at the time of the settlement this information must be provided within three months of the date of settlement.

If there is a resident trustee at settlement, but at any time after that there is no resident trustee, the information must be made within three months of the date on which the trust ceases to have a resident trustee.

Information required

Where there is no resident trustee the settlor must give the following information to Inland Revenue:

• the name of the trust
• details of the settlement, including the date of the original settlement and dates of any subsequent settlements
• the market value of property transferred
• any consideration (payment) received by the settlor for property settled onto the trust
• names and addresses of trustees and beneficiaries
• a copy of the trust deed and any amending deeds or deeds of variation
• the names and addresses of the persons for whom any nominee is acting, and
• any other information that Inland Revenue may require.

If the property settled onto the trust includes land, the Settlor must also provide the legal description and location of the property.

If the property includes shares, the settlor must provide details including the number or shares, the name of the company and the country of incorporation. If the property includes loans or other financial arrangements the settlor must provide details of the parties to the arrangement(s), the interest rate and the term of any loan.

How to provide the information

The information is provided by completing form IR 462, “Settlors of trusts disclosure,” which is available from Inland Revenue.

Failure to provide information

If the reqired information is not provided to Inland Revenue in addition to any penalties for failure to comply, Inland Revenue can determine the correct amount of trustee income for an income year.

Resident trustees of foreign trusts also have to provide information to Inland Revenue

A New Zealand resident trustee of a foreign trust that is not registered under the Charities Act must also provide information about the foreign trust to Inland Revenue. 

Information required

The resident trustee of a foreign trust must give the following information to Inland Revenue:

• the name of the trust or other identifying particulars such as the date the foreign trust was settled
• the name and contact detals for the resident foreign trustee(s)
• whether a settlor is resident in Australia
• if a resident foreign trustee is a professional trustee the trustee must advise the details of the trustee’s professional organisation eg the Law Society
• details of the appointing trustee and the agent trustee,  if a trustee is appointed as the trust’s agent.

How to provide the information

The information is provided by completing form  IR607 “Settlors of trusts disclosure,” which is available from Inland Revenue.

Inland Revenue must be notified by the resident trustee within 30 days if any of the information provided changes.

Time frame for meeting the information obligations

With some exceptions, the information must be made within the later of 30 days from the trustee’s appointment or the trustee’s arrival in New Zealand.

Other records to keep

A resident trustee for a foreign trust must keep records that show the history of the trust’s administration.

These records would include:

• a copy of the trust deed or other constitutional document
• details of settlements and distributions made on or by the trust
• a record of assets and liabilities of the trust and details of all amounts received and expended by the trustee, and
• if the trust carries on a business, records of the accounting information system.

Failure to provide or keep information

The penalty for not providing the information required or for knowingly giving false information is a fine of up to $50,000.

Further, if the New Zealand resident trustee of a foreign trust fails to provide the information required or to keep appropriate records the trust can be taxed in New Zealand on its worldwide income.

References

• Tax Information Bulletin Vol 18, No 5, June 2006 at p 110
• Tax Administration Act 1994, s 59, 59B, 93B
• Vicki Ammundsen, Taxation of Trusts, ed 2, CCH New Zealand Limited (2011) chapter 20