Business Accountants: Trust Tax Rate Increase to 39%: What You Need to Know

 

As the government plans to increase the trustee tax rate to 39%, understanding the proposed changes is essential for trustees and beneficiaries alike. 

 

Here’s a breakdown of what you need to know:

 

13 March 2024 Update: 

 

The Taxation Bill is set to increase the tax rate on trustee income from 33% to 39% starting from 1 April 2024. A two-tier system has been proposed, retaining the 33% rate for trusts with less than $10,000 income, disabled beneficiary trusts, deceased estates, and energy consumer trusts. 

 

Complexity around marginal tax rates for beneficiaries and administrative concerns led to the abandonment of certain proposals. No specific anti-avoidance measures are in place for trusts with income below $10,000.

 

08 February 2024 Update: 

 

The proposed increase in the trustee tax rate has sparked interest in restructuring to minimize exposure to the new rate. Scenarios such as altering dividend policies or distributing income to beneficiaries may raise concerns about tax avoidance. 

 

Transferring income-earning assets to a company structure to benefit from the lower corporate tax rate is permissible but may face scrutiny in certain cases. Winding up a trust or investing in a portfolio investment entity are legitimate options. Inland Revenue highlights potential areas for scrutiny, including income allocation, dividend replacement with loans, and artificial timing alterations.

 

While the impending tax rate increase prompts strategic considerations, it’s crucial to ensure compliance and transparency in any restructuring efforts. Understanding permissible actions versus potential avoidance is key to navigating the changing tax landscape effectively. 

 

Stay informed and seek professional advice to make informed decisions regarding trust taxation.

 

 

Your Outside Team

 

 

Need a bit of assistance with your business? Contact an Outside Accounting team member today and learn more about our fixed fees. You won’t regret it.

Aside from business consultation, we are business accountants Wellington who offer accountingbookkeeping, payroll services designed to help you achieve greater financial success.

You can click here to speak to a businessaccounting and bookkeeping firm. We will give you a call to know more about your needs. We will explain to you how we can improve your business. 

 

 

 

Contact 

Wellington Accountants | 

Business Accountants | 

Construction Accountants 

Property Accountants 

Contractor Accountants 

Hospitality Accountants |

 

Property Developer Accountants | Accountants Wellington | Wellington Accountant | Restaurant Accountants | Cafe Accountants | Business Consultation | Business Adviser | Accountants for Healthcare | Accountants for Trades | Accounting for Doctors | Accounting for Dentists | Accounting for Architects | Accounting for Engineers

AddressLevel 2, 182 Vivian Street,
Te Aro, Wellington 6011, New Zealand 

Mail: PO Box 24-457, Wellington 6142

Phone04 889 2975

 

Wellington Accountants Wellington Bookkeepers Wellington Business Accountants Property Accountants Construction Accountants 1

Business Accountant: Before You Use AI With Client Data: What New Zealand Businesses Need to Know

The adoption of AI tools in New Zealand businesses has accelerated significantly in the past 12 to 18 months. Tools like Claude, ChatGPT, and various workflow automation platforms are being used to speed up processes, improve decision-making, and free up staff time.
That’s largely a positive development. But there’s a step many businesses are skipping — one that has meaningful legal and reputational implications.

Read More »
Wellington Accountants Wellington Bookkeepers Wellington Business Accountants Property Accountants Construction Accountants 1

Business Accountant: Why I Changed My Mind About AI — And What I Think Business Owners Should Do About It

I want to be upfront about something: for a while, my approach to AI was essentially to ignore it.
My reasoning, which felt logical at the time: the technology is changing so fast that investing time in learning any particular tool is almost pointless. By the time you’ve got comfortable with it, something else has emerged. So why bother?
I’ve had to revise that position.

Read More »
Wellington Accountants Wellington Bookkeepers Wellington Business Accountants Property Accountants Construction Accountants 1

Business Accountant: The Leverage Principle

There’s a distinction I’ve been thinking about more carefully recently, and I think it’s one of the most important things a business owner can get clear on.
The distinction between being busy — and being leveraged.
Busy is easy to achieve. Most business owners have more than enough to fill their time. The inboxes, the client calls, the operational decisions, the staff questions. It’s not hard to stay occupied.

Read More »