New trust reporting and disclosure requirements

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As new trust legislation is introduced, requirements are becoming increasingly complex. From 1 April 2021 new financial summary requirements and detailed reporting requirements were introduced.

Financial summary requirements

Trusts are now required to provide a financial summary with their annual tax return, including a balance sheet, profit and loss, details of beneficiary current accounts and transactions with associated persons to Inland Revenue. Some small trusts may be exempt from the additional reporting requirements, but will still be required to provide a financial summary.

Detailed reporting requirements

The Act requires that trusts will also need to declare a range of information including:

  • Details of any person who is able to appoint or dismiss a trustee, add or remove a beneficiary or change the Trust Deed
  • Details of any settlements during the year including the names, IRD number, date of birth and tax jurisdiction of the settlors involved in the transaction
  • Details of any historic settlements that have not already been declared to the IRD including the names, IRD number, date of birth and tax jurisdiction of the settlors involved in the transaction
  • Any other information requested by the IRD going back to 2015

The definition of a settlor is not limited to the person named as the settlor on the trust deed. A settlor is someone who transfers value to a trust. A transfer of value can be many things including providing financial assistance to the trust, providing services to the trust at no charge and also not charging on a balance owed to them by the trust.

Non-active trusts, foreign trusts and charitable trusts are exempt from the reporting requirements.

Please contact us if you need help navigating reporting requirements or trusts in general.

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