Surprise, surprise! You’ve read it right! IRD has introduced new financial statement reporting and standards for domestic trusts, which will apply from the 2021-22 income year. This might mean another layer of obligation for you, so here’s a quick rundown of the new rules to keep you updated:

Why the new rules and who are affected by these changes?

The new trust disclosure rules aim to support IRD’s ability to assess compliance with the new 39% personal income tax rate and monitor structure and entity use by trustees. Around 180,000 domestic trusts are expected to be impacted by the new disclosure
requirements. Trustees with assessable income are covered by the new rules,
with several exemptions such as:


  • trustees of non-active trusts
  • foreign trusts
  • charitable trusts
  • trusts that are eligible to be Maori Authorities
  • widely-held superannuation funds
  • exempt employee share schemes
  • debt funding special purpose vehicles, and
  • lines trusts

Most New Zealand trusts will now be required to file an income tax return and comply with additional disclosures such as:


  • statement of profit or loss and statement of financial position
  • the amount and nature of settlements made in the income year, with exceptions
  • the name, date of birth, tax residence, IRD Number of all settlors of the trust
  • the amount and nature of distributions in the income year, with exceptions
  • the name, date of birth, tax residence, and IRD Number of all beneficiaries receiving a distribution
  • the name, date of birth, tax residence, and IRD number of each person with a power of appointment under the trust deed


Financial statements will also be required but some will be considered a “simplified reporting trust” which is one that has an assessable income of less than $100,000, deductible expenses of less than $100,000, and total assets of less than $5 million in an income year.

Financial statements

Financial statements must include: the trust’s financial position, a profit or loss statement using double-entry recording, and disclosure of the type of valuation principle adopted for shares/ownership interests, land and buildings. Unless the trust is a simplified reporting one, the financial statements must also be prepared to apply accrual accounting principles and include a statement of its accounting policies.

The financial statements must disclose comparable figures for the previous income year and include a reconciliation between the P&L statement to taxable income and a detailed schedule of the trust’s fixed assets and depreciable property used for tax purposes as well.

Details such as name, nature of association and transaction, and amounts involved in any below market value transactions must also be disclosed. Note that trusts with forestry and livestock businesses will be required to include additional details.

Will these new trust reporting requirements affect you? If you’re unsure and have any questions about how these might impact you, give us a buzz and your usual Outside go-to team member will provide you with more information.

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