Introduction:
The trust information-gathering powers in s 59BA were introduced with effect for the 2021-22 and later income years. The retrospective trust information gathering power in s 59BAB was introduced with effect from 7 December 2020.
As outlined in Tax Information Bulletin Volume 33 Number 3 (April 2021) (at pp 5-8) the purpose of trust information gathering powers is to collect further information from trustees to gain insight into whether the top personal tax rate of 39% is working effectively and to provide better information to understand and monitor the use of structures and entities by trustees.
The Commissioner may use the information collected for compliance and audit purposes.
Summary:
The key points discussed in this Statement are summarised as follows:
Obligation to file returns
Order in Council (OIC)
Information required: A statement of profit or loss and a statement of financial position; Settlor & settlement details; Beneficiary & distribution details; Persons with powers of appointment; Trustee details
Excluded trusts
Persons responsible for the performance
Variation to the requirements
Retrospective collection
Trustees who derive assessable income are obliged to file a tax return in the form prescribed by the Commissioner (unless the trust is an excluded trust). The trustees are required to include with the return the further information set out in s 59BA(2). The Commissioner has the discretion to not require this further information to be included with the return
The obligation to provide further information with the return is different from the obligation to maintain the financial statements required by Order in Council reference number/name. Trustees who derive assessable income are obliged to prepare the financial statements required by Order in Council reference number/name (see 23 for more information) but these financial statements may not be required to be provided to the Commissioner.
Certain information from the financial statements will be required to be included with the tax return filed with the Commissioner. This Operational Statement sets out what information the Commissioner requires to be provided with the tax return.
The main changes impacting some or all trustees (depending on the requirement) subject to s 59BA of the Tax Administration Act 1994 are:
Preparation of financial statements and filing a statement of profit or loss and statement of financial position.
Disclosure of prior settlor details.
Disclosure of appointee details.
Disclosure of more information about monetary and non-monetary settlements and distributions (and the related settlors and beneficiaries).
Providing more financial information including financial information relating to the non-business activity.
A trustee who is required to make a return by s 59D (which relates to foreign trusts) is excluded from the requirement to include the information required by s 59BA(2).
Read the full text of Operational Statement on https://www.taxtechnical.ird.govt.nz/-/media/project/ir/tt/pdfs/consultations/current-consultations/ed0235.pdf?modified=20211015002400&modified=20211015002400
Comment deadline: 30 November 2021
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