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New reporting requirements for NZ trusts

Trusts with assessable income have increased disclosure requirements from the 2021-22 income tax year. Does your trust comply?

Changes to the annual reporting requirements for trusts have been enacted from the 2021-22 tax year to assist the IRD to better understand the use of trusts and their financial positions. 

Minimum standards for financial reporting by domestic trusts now apply, along with the requirement for trustees to provide increased disclosures around settlors, settlements, beneficiaries and appointers to the trust, within their income tax returns.

There are exemptions to the new reporting requirements for non-active trusts, foreign trusts and charitable trusts, along with simplified requirements for small trusts (less than $100,000 in assessable income / deductible expenditure, and less than $5 million in assets at balance date).

Financial statements, including a Statement of Profit and Loss and a Statement of Financial Position must be prepared and included in the trust’s income tax return, along with the details of connected persons and transactions including settlors and any settlements made during the year. Details of any beneficiary who receives a distribution and movements in a beneficiary’s current account also need to be disclosed.

The additional disclosures are extensive, so if you are unsure, please get in touch.

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