New Zealand Trust Taxation: The International Dimension
Bulletin for International Fiscal Documentation, Vol. 53, pp. 398-404, 1999
Victoria University of Wellington Legal Research Paper No. 31/2012
9 Pages Posted: 12 May 2010 Last revised: 15 Apr 2015
Date Written: 1999
Abstract
International aspects of New Zealand’s trust regime are driven by three things. First, operating independently of the trust regime is New Zealand’s policy to tax all income that has a New Zealand source. Secondly, there is the structural factor of the trust regime that trusts themselves are not taxpaying entities. Thirdly, New Zealand has adopted as policy the principle that the mere residence of a trustee should not determine tax liability. The effect of the policy to tax all income from New Zealand is that any income derived by any trustee is taxable if the income has its source in New Zealand. Trustees are taxed as the economic agents of the settlor.
Foreign-source beneficiary income is taxable if the beneficiary resides in New Zealand, but not taxable if the beneficiary is non-resident, even if the trustee is resident. Whether trustee income (that is, income accumulated within trusts) is taxable depends on the residence of the settlor. If the settlor is non-resident, then, ordinarily, the income is not taxable, even if the trustee is resident. If the settlor is resident, then the income is taxable, even if the trustee is non-resident.
Keywords: Income Tax, Income Tax Act 1994, Trust Law, International Trust Law
JEL Classification: K33, K34
Suggested Citation: Suggested Citation