29 April 2005 Media Statement
Rule changes for NZ based foreign trusts
A forthcoming law change will require foreign trusts with New Zealand-resident trustees to provide some tax information
to the Inland Revenue Department, Revenue Minister Michael Cullen said today.
The change, due to come into effect on 1 April next year, will enable New Zealand to meet international commitments to
disclosure of information with other tax jurisdictions, Dr Cullen told the International Fiscal Association conference
in Christchurch.
“Foreign trusts that have New Zealand-resident trustees but receive no New Zealand income are not currently required to
provide information to Inland Revenue on a regular basis, or to keep New Zealand tax records,” Dr Cullen said.
“This is because they are outside our tax base. But a problem arises for the tax authorities when countries with which
we have double tax agreements request tax information on foreign trusts that have a presence here, as they are entitled
to do under those treaties.
“This has been of particular concern to the Australian government. Our bilateral relationship with Australia is critical
to us but, at the same time, we do not want to impose rules that unnecessarily hinder legitimate New Zealand business.
“We have worked closely with those who will be most affected to develop policy that works for all concerned, one that
enables New Zealand to co-operate with other tax jurisdictions while not disrupting the legitimate financial
transactions of foreign trusts.
“New Zealand-resident trustees of foreign trusts will have to provide only limited information to Inland Revenue and
keep financial records in New Zealand for each trust. At least one New Zealand resident trustee of each trust will be
required to be a member of an organisation that has been approved by Inland Revenue, such as an accounting or legal
organisation.
“Trustees will not be required to provide detailed financial information to Inland Revenue unless a trust has an
Australian resident settlor, or one of our double tax agreement partners requests information,” Dr Cullen said.
ENDS