Exploring the Implications of the Tax Trust Rate Change in Budget 2023

Budget 2023 had its fair share of surprises, but one expected change was the adjustment to the tax trust rate. Grant Robertson, as hinted previously, decided to raise the tax trust rate from 33% to 39%, aligning it with the top personal income tax rate. This alteration is set to take effect on 1 April 2024.

The primary goal of this change is to promote fairness within the tax system. Since the top personal tax rate increased to 39%, there has been a notable 50% surge in the volume of funds passing through trusts.

Which trusts will be impacted?

The government asserts that “only a small portion of trusts will bear the majority of the additional tax burden.” The top 5% of trusts will be most affected, while the lower 24% will remain unaffected. Certain trusts, such as deceased estates and disabled beneficiary trusts, will still adhere to the previous 33% tax rate and be exempt from this alteration.

To learn more about these changes, you can refer to the fact sheet provided by the Inland Revenue.

Do you need to take action?

Before this change comes into effect, individuals involved in trusts should evaluate their asset allocation from a tax perspective.

There may be opportunities to make adjustments that optimize your arrangements and minimize unnecessary tax payments. For example, if the beneficiaries of your trust pay taxes at a lower rate, the trust can distribute its annual income to them. By doing so, the income can be taxed at the beneficiary’s personal tax rate. If this option is not viable, the trust might consider allocating income to a beneficiary’s current account or establishing a sub-trust for that beneficiary.

Additionally, it may be worth considering the administrative costs associated with maintaining a trust and whether it remains advantageous under the new tax rate. The company tax rate, which remains at a flat 28%, could present alternative avenues for asset ownership.

Let us assist you in reviewing and restructuring your trust

Navigating the complexities of structuring your affairs in a tax-efficient manner can be challenging, but we are here to assist you. Whether you have questions about your trust, need guidance regarding the implications of the new tax rate, or seek strategies to minimize unnecessary tax burdens, we are ready to provide the expertise you require.

Feel free to reach out to us by dropping us a note or giving us a call. We eagerly await the opportunity to assist you.


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. 




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

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

Mail: PO Box 24-457, Wellington 6142

Phone04 889 2975

New Zealand Accounting, Bookkeeping & Property Business Consultancy Services | Wellington & Lower Hutt Xero Property Accountants Business coach business consultation business adviser

Business Accountants: Understanding Changes in Residential Property Taxation

Recent years have seen significant adjustments to the tax landscape, particularly concerning residential property. The government has responded to calls from various quarters to address investor demand in this sector. Notably, recent changes have been initiated to reverse tax policies affecting residential property, aligning with promises made by both National and ACT during their election campaigns.

Read More »