IR Reporting for Trusts
Our development has been based on helping users meet the latest IR
requirements as published here;
https://www.ird.govt.nz/roles/trusts-and-estates/additional-reportingrequirements-
for-nz-domestic-trusts
The IR site (above) contains a handy interactive decision-making tool to determine if reporting is required for each trust you’re involved with.
More detailed information on the new reporting requirements is available here;
https://www.taxtechnical.ird.govt.nz/operational-statements/2022/os-22-
02?ref=ird
Contents
Exempt Trusts
Settlements
Settlor details required
Financial Statements
IR requirements
Beneficiaries and distributions
Power of Appointment
Exempt Trusts
The following trusts are exempt, within the profile of the Trust you can set the type of trust.
- Trusts that have made a non-active declaration.
- Foreign trusts
- Charities
- Trusts eligible to become Māori Authorities
- Widely-held superannuation funds
- Exempt employee share schemes
- Debt funding special purpose vehicles
- Energy lines trusts
Settlements
Details of the person (or entity) who made the settlement (the settlor)
The nature (cash, financial arrangements, land, buildings, shares, services,
other) and the amount of the settlement.
- Assets and Liabilities, when acquiring an asset, record it
as being ‘Gifted to the Trust’ - Reports / Debt and Gifting, you’ll be able to see and
report on Gifting - By editing the transactions you can see more information on any asset
that has been gifted
Settlor details required
Details of the settlor, including the name and date of birth (or the commencement date for companies or other non-individuals), the jurisdiction of tax residency and IRD number or Taxpayer Identification Number (TIN) for non-residents.
- Within the ‘Parties’ tab of the Trust, you can view or add people who are the Settlors and record their details. In the 'Tax and Finances' tab, you can record:
- Residency for Tax and IRD/TIN details
Financial Statements
The IR6 tax return now asks for additional information about the trust's financial
performance and position, including:
- Net profit or loss before tax
- Assets (e.g. land, buildings, and shares - and the methods used to value
these assets) - Liabilities (e.g. loans and other money the trust owes to creditors)
- Equity (this means assets available to trustees after liabilities are taken into account).
The ability to record and report:
- Assets, Liabilities, Income and Expenditure, Loans and Repayments and Expenditure then report on Financial Position, Debt and Gifting, Loan Advances (and recoveries), Distributions, Income and Expenses and Assets Bought and Sold
IR requirements
Update to Section HC 27 Income Tax Act 2007
A loan to a trust is not a transfer of value so this is not a settlement. If the loan is later forgiven, the forgiveness is a settlement, and if the lender does not charge interest on the loan they also become a settlor.
- The ability to record and report on any deemed settlors
Beneficiaries and distributions
A beneficiary is a person (or entity) who can benefit or does benefit
from a trust. Trustees can choose to allocate beneficiary income or make distributions to
beneficiaries.
If a person receives an allocation of beneficiary income or distribution during the
year, please complete the 'Estate or trust beneficiary details' IR6B form, and identify
the nature of the distribution under the following categories:
Accounting income and any other amounts, Corpus, Capital, Use of the trust property at
less than market value, Distribution of trust assets, and Forgiveness of debt.
- Within the ‘Parties’ tab of the Trust is the ability to record a party as a beneficiary, and select their beneficiary type (discretionary, final, primary, secondary etc)
Reporting is available via the Export Trust Profile
- Within Assets and Liabilities, select ‘Make Distribution’ and record type (asset or income),
what is being distributed, amount, date and add additional details.
Reporting is available under Assets and Liabilities/Reporting/Distributions
Power of Appointment
IR requirements. A person (or entity) who holds a power of appointment has the legal
power to add or remove trustees, add and remove beneficiaries, or alter the terms of
the trust deed.
From the 2021-2022 income year onwards, trusts must tell us the details of any person
(or entity) who holds a power of appointment. The details required are:
- Full name
- Date of birth (or commencement date for companies or other non-individuals)
- Jurisdiction of tax residency
- IRD number/Taxpayer Identification Number (TIN)
- Commence date (that the person acquired the power of appointment)
- Cease date (that the person ceases to hold the power of appointment).
those with the power to vary trust deeds. The former tends to be named appointers. The latter tends to be a description of parties.
- Power to Vary the Trust Deed is therefore a freehand field which can be entered and edited on the Trust Profile. Edit trust profile’ on Workspace and then in General Details.
- Setting people with the Power to Appoint Trustees and Power to Appoint Beneficiaries
is done under ‘Parties’.- You can select a removal date if required.
- If someone has multiple roles – e.g. a settlor, appointer, trustee or beneficiary – tax and other details only need to be entered against them within the ‘Parties’ tab.