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Changes to Trust Reporting

  Oct 27, 2022

Changes to Trust Reporting

Changes have been made to the annual reporting requirements for domestic trusts to better understand and monitor the use of trusts and their financial positions. Trustees will need to provide additional information about a trust’s earnings, financial position, settlements, settlors, distributions, beneficiaries, and powers of appointment. 

Any trust that derives assessable income in a year will be required to provide these additional disclosures for that year (some exclusions apply). The extra information is required for the 2021-2022 tax year and every year after that.

Your Malloch McClean advisor will discuss this with you when we met to discuss your 2022 Financial Statements. Please note that there will be an extra fee for the time required to compile the information and complete these new disclosures.

Who needs to comply?

All trusts who receive income in a year will need to comply with the new rules and provide additional information when they file their return.

The only trusts that are excluded are:

  • non active complying trusts (that have filed an IR633 non active trust declaration)
  • 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
  • energy lines trusts.

Additional disclosures

The additional disclosures required for trusts in the IR6 are:

  • A statement of financial position
  • A statement of profit or loss
  • The amount and nature of settlements received; these do not need to be disclosed if they are minor services incidental to the activities of the trust and are provided to the trustee at less than market value
  • Settlor details, including those of previous settlors if they haven’t been supplied previously to the Commissioner
  • The amount and nature of distributions made
  • Details of beneficiaries who received capital and/or income distributions
  • Details of people who have the power to appoint or dismiss a trustee, to add or remove a beneficiary, or to amend the trust deed

Financial statements 

In addition to the above disclosures, from 31 March 2022 all trusts will also have to prepare financial statements. While these financial statements are not filed with the IR6, they must be available if Inland Revenue requests to see them.

This is only a summary of the key information Inland Revenue will require under the new disclosure rules, and not a comprehensive list. Further information can be found on IRD’s website. 

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