21 February 2017, the Taxation (Business Tax, Exchange of Information, and Remedial Matters) Act, which will increase disclosure obligations for NZ resident trustees of NZ foreign trusts, received Royal Assent and was brought into force. Approved by Parliament on 14 February, the law further provides for New Zealand’s participation in the G20/OECD Common Reporting Standard for automatic international exchange of financial account information.
The disclosure requirements in respect of foreign trusts require trustees to register the trust with the Inland Revenue Department and provide: the name of the trust; the details of each trust settlement; and the name, email address, physical residential or business address, jurisdiction of tax residence, taxpayer identification number of every settlor or controller of the trust.
For a fixed trust, the trustee must provide the name, age, and taxpayer identification number of the beneficiary. For a discretionary trust, the trustee must provide details of each beneficiary or class of beneficiary sufficient for the IRD to determine, when a distribution is made under the trust, whether a person is a beneficiary.
The trustee must also provide a copy of the trust deed (and any subsequent amendments or additions) and an annual return, which must be accompanied by the filing of annual financial statements if the trustee prepares financial statements or is required to prepare financial statements, as well as details of trust distributions and the beneficiaries.
A trustee will have to register any foreign trusts by 30 June 2017 and notify any subsequent changes within 30 days. Disclosure of the information is limited to “a person who is a member of the New Zealand Police or an officer, employee, or agent of the Department of Internal Affairs”.
John Shewan, who was appointed by the government to review existing legislation following the release of the “Panama Papers” last year, recommended the new disclosure requirements.