The New Zealand Parliament has passed a Bill which, following
royal assent, will meaningfully increase disclosure obligations for
NZ resident trustees of NZ foreign trusts. The Taxation
(Business Tax, Exchange of Information, and Remedial Matters) Bill,
was passed by Parliament on 14 February 2017.
The Bill contains important provisions relating to disclosure
requirements, annual returns, the payment of fees and automatic
exchange of information.
Arguably the Bill makes New Zealand less attractive for the
establishment of foreign trusts than previously as most of the
disclosure provisions are not required by competitor jurisdictions
and the penalties imposed on trustees and their officers for
failure to comply can be onerous. For those who wish to
retain their NZ trust, there are immediate steps for a NZ resident
trustee to take, which are described below.
The disclosure aspects of the Bill follow the Shewan Inquiry
into the practices and uses of the New Zealand Foreign Trust regime
as a result of public dismay at numerous New Zealand connections to
the Panama Papers data leak in April 2016 and the perceived lack of
transparency of foreign trusts established under New Zealand
The disclosure provisions of the Bill will run parallel to the
Common Reporting Standards of which New Zealand is a
The Bill introduces disclosure requirements for foreign trusts,
(which were previously confidential), requiring trustees to
register the Trust with the Inland Revenue Department and providing
the following information:
name of the trust;
details of each trust settlement;
the name, email address, physical residential or business
address, jurisdiction of tax residence, taxpayer identification
number of every settlor or controller of the trust;
for a fixed trust, the name, age, and taxpayer
identification number of the beneficiary;
for a discretionary trust, details of each beneficiary
or class of beneficiary sufficient for the IRD to determine, when a
distribution is made under the trust, whether a person is a
a copy of the trust deed and, going forward, all amendments or
additions to it.
a trust annual return, which must be accompanied by the filing
of annual financial statements if the trustee prepares financial
statements or is required to prepare financial statements as well
as details of trust distributions made and to whom.
It is important to note that the trustee will have to register
any foreign trusts they act as trustee for by 30 June 2017, and
thereafter notify any changes within 30 days of becoming aware of
them. There will be a prescribed fee of $270 for this registration
and an annual fee of $50. These costs will be in addition to
the increased administrative cost to effect the disclosures.
The issue of disclosure is significant given the global debate
concerning public registers of beneficial ownership. In a move that
will be applauded by privacy advocates, the Bill has limited
disclosure to 'a person who is a member of the New Zealand
Police or an officer, employee, or agent of the Department of
Internal Affairs'. On the flip side, the onerous one time and
annual disclosure obligations far exceed those of other offshore
and 'mid-shore' jurisdictions. As such, clients should be
encouraged to review their position and consider whether the new
provisions sway their thinking to consider other jurisdictions.
The bill also enables the country's participation in the
G20/OECD Common Reporting Standard for automatic international
exchange of financial account information.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
To print this article, all you need is to be registered on Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
The Ministry of Corporate Affairs ("MCA") vide Notification1 dated December 7, 2016 had notified various provisions of the Companies Act, 2013 (hereinafter referred as "CA 2013") which have come into force with effect from December 15, 2016.
When buying a franchise, you should understand your rights, to make an informed decision before signing the agreement.
Some comments from our readers… “The articles are extremely timely and highly applicable” “I often find critical information not available elsewhere” “As in-house counsel, Mondaq’s service is of great value”
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).