Date posted: 09/11/2021 2 min read

Have your say: Trust Disclosure Consultation

Only a few days left to have your say on the reporting requirements for domestic trusts.

In Brief

  • ‘Reporting requirements for domestic trusts’ issues paper
  • ED0235: Reporting requirements for domestic trusts.
  • Consultation closes 15 and 30 November 2021

Late last year Government announced new disclosure rules for domestic trusts apply from the 2021–22 income year. Trustees will have to prepare financial statements and provide extra information with their income tax returns.

Inland Revenue are currently consulting on the minimum requirements for these financial statements. Officials are seeking feedback on these requirements in the ‘Reporting requirements for domestic trusts’ issues paper. The closing date for submissions on the proposed minimum requirements is 15 November 2021.

The issues paper also specifically asks for feedback on whether small trusts should be partially exempt from the requirements, and whether there are associated persons transactions that should be excluded from the minimum requirements for trustees.

Inland Revenue has also released a draft operational statement, ED0235: Reporting requirements for domestic trusts. This sets out the proposed approach to trust information-gathering powers. The closing date for submissions on the draft operational statement is 30 November 2021.

The operational statement sets out the trust information gathering powers in s 59BA  of the Tax Administration act which were applies for the 2021-22 and later income years. The retrospective trust information gathering power in s 59BAB was introduced with effect from 7 December 2020. These rules were introduced  to gain insight into whether the top personal tax rate of 39% is working effectively and to provide better information to understand and monitor the use of structures and entities by trustees.

Our NZ Tax Team have spoken to many members around the country this year as part of our NZ Tax Roadshow and sharing knowledge webinars. We have heard members calling for clarity and certainty around what information will be required – and to what level of detail. Concerns have also centered on the availability of client records and the additional compliance required to prepare this information.

According to Inland Revenue, approximately 180,000 domestic trusts (excluding estates) may be affected to some extent by the new disclosure requirements with the financial statement disclosure requirements affecting approximately 55,000 of these domestic trusts.

Members who would like to share their thoughts on either of these consultation statements can contact the NZ Tax Team at [email protected] or made a submission to Inland Revenue by emailing [email protected].