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New Zealand Explains Foreign Trust Disclosure Changes

Monday, March 27, 2017

New Zealand has published guidance on the increased disclosure requirements for foreign trusts with New Zealand-resident trustees.

Changes to the rules were included in The Taxation (Business Tax, Exchange of Information, and Remedial Matters) Act 2017, which came into effect on February 21, 2017.

From June 30, 2017, the law introduces an obligation for affected trusts to register with Inland Revenue, file annual disclosure returns, and pay registration and filing fees. Information on the register of foreign trusts will be shared with certain New Zealand government agencies.

The resident trustee of the foreign trust would need to comply with the registration and filing obligations to qualify for the exemption from tax on foreign-sourced income, New Zealand's Inland Revenue said.

The amendments contained in the Act require existing trusts to apply for registration by June 30, 2017. Foreign trusts formed after the February enactment of these amendments have 30 days to apply for registration.

New Zealand taxes trusts on the basis of the tax residence of the settlor. New Zealand therefore provides an exemption for foreign-sourced amounts derived by trustees resident in New Zealand if the trust is classified as a foreign trust.