Estates and Trusts

Foreign Trusts: a case study in the law of unintended consequences

Tax law, like life, is full of unintended consequences. The foreign trust rules are in more ways than one a good example of this. 

When the current taxation regime for trusts was introduced in 1988 it was as part of a series of international tax reforms “aimed at taxing New Zealand residents on income diverted from New Zealand and foreign-source income derived through offshore companies and trusts.”

Looking at the rules around, and usage, of trusts

 

Amidst the current uproar over the use of New Zealand’s foreign trust rules, a key irony is being overlooked: the design feature that non-New Zealand residents can use to avoid taxes in their own jurisdiction is extremely effective at preventing New Zealanders from attempting to do the same  through offshore trusts. 

OECD’s automatic exchange of information initiative impacts NZ Trusts

Inland Revenue is currently consulting on how New Zealand will implement the OECD’s Automatic Exchange of Information (“AEOI”) initiative.

As the OECD and Revenue Minister Michael Woodhouse claims, “AEOI is aimed at countering tax evasion and will be an important new means for recovering lost tax revenue.”

Get a head start on the new tax year

This is our newsletter for March 2016 - join our mailing list to receive this in your inbox.

Hello again. With Easter just around the corner that’s a sign the 31st March tax year end is fast approaching so firstly here’s a reminder of some useful pre year actions. 

Imputation Credit Account balances 
Carry out a review of your company’s imputation credit account to ensure it is in credit. Not only can a debit balance affect the company’s ability to pay dividends but 10% imputation penalty tax on the debit balance will be payable on 20th June 2016

Are the opponents of a comprehensive capital gains tax (CGT) really just NIMBYs in another guise?

Capital Gains Tax

At times it’s hard to escape the suspicion that the vociferous opposition to CGT from the likes of the New Zealand Property Investors Federation appears to be more motivated by the self-interest of protecting untaxed capital gains than any concerns about introducing a complex new tax.

Welcome To Hotel New Zealand - Where You Can Checkout But Never Leave

“Welcome to the Hotel California Such a lovely place (Such a lovely place)
Such a lovely face
Plenty of room at the Hotel California
Any time of year (Any time of year)
You can find it here”

Since the start of the year we’ve been hearing lot about whether or not New Zealand is a “Rock Star economy”.

I’m not so sure about that but I do see echoes of one of The Eagles most iconic hits: Hotel California.

Fancy a foreign trust? Here take two!

Tax Avoidance

Outside Budget Day tax rarely features on prime time TV so I therefore watched with interest last week’s 60 Minutes story on New Zealand’s foreign trust industry. The programme contained a rather eye-opening remark by the Minister of Revenue Peter Dunne that foreign trusts represented “legitimate tax avoidance”. The Minister’s comment, as the presenter duly pointed out, seemed to contradict his own department’s view of matters.