Monday -Friday - 9:00 - 18:00 New Zealand Time

 

How Non Tax Residency of Settlor or Trustee can Effect New Zealand Trust Status. 

The trust rules are a settlor-based taxation regime. The trust rules interact with the core provisions to tax income derived by the trustees of a trust based on the residence of the settlors, rather than the residence of the trustees. All New Zealand-sourced amounts are taxed in New Zealand regardless of the residence of the settlor. However, foreign-sourced amounts are generally taxable in New Zealand only where the settlor is resident in New Zealand

 

The trust rules are a settlor-based taxation regime. The trust rules interact with the core provisions to tax income derived by the trustees of a trust based on the residence of the settlors, rather than the residence of the trustees. All New Zealand-sourced amounts are taxed in New Zealand regardless of the residence of the settlor. As a non-resident settlor your trust would be classified as a foreign trust for taxation purposes.

Section HC 10 (1) (a) (I) ITA 2007 It cannot be complying trust due to it will have non-resident passive income, and non-resident foreign sourced income ( such as Shares investment)

Section SC 11 ITA 2007 A trust is a foreign trust at a moment in time if no settlor is resident in New Zealand at any time in the period that—

(a) starts on the later of 17 December 1987 and the date on which a settlement was first made on the trust; and

  • ends with the moment in time.

It is also possible for a trust to satisfy the requirements to be a complying trust, and to have only a non-resident settlor(s) so that it is also a foreign trust. (source IS 18/01)

A person may be able to make an election under s HC 33 ITA 2007

Election under s HC 33

Where a trust does not satisfy the requirements of s HC 10(1)(a)(i) because it derives non-resident passive income, non-residents’ foreign-sourced income or exempt income under s CW 54, a trustee, settlor or beneficiary of the trust may be able to make an election under s HC 33, so that the trust can be a complying trust under s HC 10(1)(ab). (all section reference to ITA 2007)

Taxation at trustee tax rate which is 33%

 

 

 

Generated with MOOJ Proforms Version 1.5

Please fill the form below to contact us! 

 

*Required information.