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If a foreign trust has one or more New Zealand resident trustees (resident foreign trustees), the trustees must register the trust with us and comply with ongoing disclosure and annual return processes. Foreign trusts with a resident foreign trustee are known as New Zealand Foreign Trusts (NZFTs).
Registration and compliance with ongoing obligations allows a NZFT to receive a tax exemption for foreign sourced-income. If a foreign trust receives income that is not exempt (ie, foreign sourced-income without the tax exemption or NZ-sourced income) it must apply for an IRD number and file annual returns on the Income tax return: Estate or trust (IR6) form.
NZFTs that existed on 21 February 2017 (pre-existing NZFTs) were required to apply for registration by 30 June 2017.
NZFTs established after 21 February 2017 or foreign trusts that appoint a resident foreign trustee after that date (new NZFTs), must apply for registration within 30 days of establishment or the appointment of a resident foreign trustee.
NZFTs with non-professional resident foreign trustees who are natural persons and for which it is their first foreign trust may have more time to complete registration documents. You can find more information in the "Special report on foreign trust disclosure rules" on our Tax policy website.
Foreign trusts with a New Zealand resident foreign trustee need to register and file annual returns with us. If a foreign trust has more than one resident foreign trustee, they are each responsible for the foreign trust's obligations.
The resident foreign trustee applying for registration must communicate with the Commissioner for the foreign trust and is known as the "contact trustee".
To register an NZFT, the contact trustee must complete and send us the following forms:
The contact trustee must also pay the prescribed application fee of $270 inclusive of goods and services tax (see "Note 1" below).
Once registration is confirmed, we will issue you with a unique NZFT number to use in the annual return process.
The contact trustee must provide any updates to the information provided at registration within 30 days after becoming aware of the change. This includes providing an additional declaration for any new persons connected to the trust.
The contact trustee must also tell us in advance if there are any changes with the contact trustee, and if so, provide us with the details.
If all resident foreign trustees are natural persons and also not in the business of providing trustee services, the contact trustee won't be required to pay the registration fee (or annual return filing fee).
To maintain a registered status as an NZFT a resident foreign trustee must:
The due date and return year a foreign trust's first annual return is for under this system, is dependant both on the balance date of the trust and whether it is a new or pre-existing NZFT. If the trust does not have a balance date, the default date is 31 March.
Pre-existing NZFTs are foreign trusts that were in existence on 21 February 2017 and had a resident foreign trustee on that date. Pre-existing foreign trusts were required to apply for registration by 30 June 2017.
For these foreign trusts, their first annual return is due six months after the end of their first return period. The first return period for pre-existing foreign trusts is the period that starts after 31 March 2017. The following table demonstrates some potential due dates and annual return periods for pre-existing foreign trusts.
|Balance date||Period for first annual return||Due date for first annual return|
|31 March||1 April 2017 to 31 March 2018||30 September 2018|
|5 April||6 April 2017 to 5 April 2018||5 October 2018|
|30 June||1 July 2017 to 30 June 2018||31 December 2018|
|31 December||1 January 2018 to 31 December 2018||30 June 2019|
New NZFTs are foreign trusts that are established subsequent to 21 February 2017 with a resident foreign trustee, or foreign trusts which appoint a resident foreign trustee subsequent to that date.
The first annual return period for new NZFTs begins from the date on which they are required to register and ends with their balance date. The following table demonstrates some potential due dates and annual return periods for new NZFTs.
|Date of establishment/appointment||Balance date||Period for first annual return||Due date for first annual return|
|24 February 2017||31 March||1 April 2016 - 31 March 2017||30 September 2017|
|1 April 2017||30 June||1 July 2016 - 30 June 2017||31 December 2017|
|25 April 2017||5 April||6 April 2017 - 5 April 2018||5 October 2018|
|1 May 2017||31 March||1 April 2017 - 31 March 2018||30 September 2018|
|3 March 2017||5 April||6 April 2016 - 5 April 2017||5 October 2017|
|30 July 2017||30 June||1 July 2017 - 30 June 2018||31 December 2018|
|1 November 2017||31 December||1 January 2017 - 31 December 2017||30 June 2018|
|12 January 2018||31 December||1 January 2018 - 31 December 2018||30 June 2019|
The minimum standards for financial statements are set out in the Tax Administration (Financial Statements Foreign Trusts) Order 2017. You can find them on New Zealand legislation's website
From 1 January 2018, if an NZFT is to be terminated or migrated after registration, the contact trustee must provide the following documents within two months of the date of termination/migration:
If an NZFT is to be terminated or migrated after registration, and before 1 January 2018, the contact trustee must provide a signed letter setting out the following details:
In April 2016, the Government announced an independent inquiry into New Zealand's disclosure rules relating to foreign trusts to make sure New Zealand's reputation is maintained. The inquiry recommended a number of amendments to the disclosure requirements for foreign trusts. These amendments came into force on 21 February 2017.
You can find more information on the inquiry, including the report, is available on the Treasury website.
Since 2006, foreign trusts which have a New Zealand resident trustee have been required by the Tax Administration Act 1994 (TAA) to disclose certain information to the Commissioner of Inland Revenue upon establishment.
Establishment of a foreign trust required disclosure of the name or identifying particulars of the foreign trust, the name of a New Zealand trustee, and whether there is an Australian settlor.
New Zealand resident trustees of foreign trusts were also required to keep certain records about the foreign trust, including the trust deed, and (if they are known) the names and addresses of settlors who make a settlement on the trust and beneficiaries who receive a distribution.
These records had to be provided to us on request. If the information provided upon initial disclosure had changed, the New Zealand resident trustee of a foreign trust was required to update that information, but annual filing with us was not otherwise required.
You can find more information in the "Special report on foreign trust disclosure rules" on our Tax policy website.