The New Zealand Trust as a Vehicle for Foreign Investment

Offshore Tax Planning Review, Vol. 6, pp. 47-56, 1996

Victoria University of Wellington Legal Research Paper No. 32/2012

11 Pages Posted: 21 Apr 2010 Last revised: 15 Apr 2015

John Prebble QC

Victoria University of Wellington - Faculty of Law; Institut für Österreichisches und Internationales Steuerrecht, Wirtschaftsuniversität Wien; University of Notre Dame Australia - School of Law

Date Written: 1996

Abstract

Sections HH 1 and HH 8 of the New Zealand Income Tax Act 1976 contain a special regime for the taxation of trusts. Income that is distributed by the trustee is taxed in the hands of the beneficiary, and income that is accumulated is taxed to the trustee. The mere fact of the trustee being resident in New Zealand does not attract tax, instead the regime takes a substantive, economics-based approach to the taxation of trusts. This article outlines the effects of this regime on people wishing to use a trust in New Zealand as a vehicle for foreign investment.

As at 2009, the special regime for the taxation of trusts in the 1976 Act appears as subpart HC of the Income Tax Act 2007. Sections HC 17-HC 23 deal with the tax treatment of amounts that beneficiaries receive from a trust, sections HC 24-26 with the tax treatment of trustee income and sections 27-29 with the tax treatment of settlors. Section CV 13 makes it clear when these amounts will be “income”.

Keywords: Trusts, Income Tax, Foreign Investment Vehicle, taxation

JEL Classification: K33, K34

Suggested Citation

Prebble QC, John, The New Zealand Trust as a Vehicle for Foreign Investment (1996). Offshore Tax Planning Review, Vol. 6, pp. 47-56, 1996; Victoria University of Wellington Legal Research Paper No. 32/2012. Available at SSRN: https://ssrn.com/abstract=1593339

John Prebble QC (Contact Author)

Victoria University of Wellington - Faculty of Law ( email )

PO Box 600
Wellington, 6140
New Zealand
+64 4 463 6311 (Phone)
Papers Indexed at HOME PAGE (Fax)

HOME PAGE: http://www.victoria.ac.nz/law/staff/prebble-scholarly.aspx

Institut für Österreichisches und Internationales Steuerrecht, Wirtschaftsuniversität Wien ( email )

Welthandelsplatz 1
Vienna, Wien 1020
Austria

University of Notre Dame Australia - School of Law

Sydney Campus, New South Wales
Australia

Paper statistics

Downloads
62
Rank
292,778
Abstract Views
436