4 Jul 2022

Changes to Trust Reporting

With the recent changes the IRD made to Trust Reporting, here is what you need to know:

Changes to the annual reporting requirements for domestic trusts.

Changes have been made to the annual reporting requirements for domestic trusts to better understand and monitor the use of trusts and their financial positions. Trustees will need to provide additional information about a trust’s earnings, financial position, settlements, settlors, distributions, beneficiaries, and powers of appointment. Any trust that derives assessable income in a year will be required to provide these additional disclosures for that year (some exclusions apply). The extra information is required for the 2021-2022 tax year and every year after that.

Does this apply to you?

If you have a trust active and no exclusions apply (exclusions can be found in the information sheet below), the trust must now provide the additional disclosures for each year it derives income starting from the 2021/2022 tax year.

If your trust has only minor income and expenses for the year, you may be eligible to make a non-active trust declaration. Once this is completed, IRD will not request an income tax return until they are informed that the trust is active again.

More information about the additional requirements.

The information sheet (which you can find in the link below) also shows which trusts need to comply with the new rules, who is excluded, and what extra information is required if you do need to do the additional reporting.

What does this mean for you:

We might need to perform AML CDD on the trust to ensure we have all the relevant documentation to complete your tax return.

When we complete your 2021-2022 income tax return we will need to disclose:

  • Your earnings and financial position (assets, liabilities, and equity).
  • The details of anyone who is a settlor of the trust.
  • The amount and nature of any settlement made during the year, and the details of the person who made the settlement.
  • The details of any beneficiary who has received a distribution during the year, the amount and nature of the distribution, and any movements in the beneficiary’s account.
  • You also need to tell us the details of any person who has power of appointment for the trust.

Download the IRD information sheet here.

If you have any questions or concerns do not hesitate to get in contact with us.

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