Nor'West News: August 11, 2022
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Your local professionals<br />
Family Trust tax reporting requirements<br />
Thosewho haveaFamily Trust may<br />
like to checktheir position withthe<br />
team of legal experts at Helmore<br />
Stewart, Rangiora.<br />
The Governmentrecently increased<br />
the highest income tax rate for annual<br />
incomes over $180,000 from33% to<br />
39%.<br />
For one reasonoranother,the<br />
Governmentdid notincrease the<br />
income tax ratefor Trusts, which<br />
remainsat33%.<br />
The Governmenthas since<br />
discovered that somehigh income<br />
earners havebeen allocating their<br />
income through their Trusts to benefit<br />
from the lower Trustincome taxrate.<br />
In response,ithas enacted changes<br />
to the Tax Administration Act 1994 to<br />
enable the InlandRevenue<br />
Department (IRD)tokeep acloser eye<br />
on Trusts anddeter high income<br />
earners gainingatax advantageby<br />
allocating incometoaTrust.<br />
Thesechanges applyfrom the start<br />
of the <strong>2022</strong> financialyear,which for<br />
most Trustswill be April1,2021.<br />
In general terms,the impact of these<br />
recent changescan be summarised by<br />
the following two options:<br />
If your Trust earns an annual<br />
income under $200 and there are no<br />
deductions, and no income is<br />
allocatedtobeneficiaries instead of<br />
beingretained by the Trust, thenthe<br />
trustees must file aNonActive Trust<br />
Declaration(form IR633)with the<br />
IRD.<br />
If Option 1does not apply, then the<br />
trustees mustfile atax returnwith the<br />
IRD andprovide alarge amount of<br />
additional informationrelatingto<br />
their Trust.<br />
In manyinstances,your Trust’s<br />
accountant mayhave already<br />
arranged compliance with thesenew<br />
IRD reporting requirements, andyou<br />
may liketocheck this position with<br />
the accountant.<br />
But for legaladvice Helmore Stewart<br />
can assist in regard to compliance<br />
with the Tax AdministrationAct, and<br />
welcomes you call.<br />
Partners ... Helmore Stewart has the<br />
expertise to assist with compliance with the<br />
Tax Administration Act.<br />
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