New disclosure rules for trusts from 2022 income tax year

There are new standards for preparing minimum requirement financial statements for trusts that will apply from the 2022 income tax year (from 1 April 2021 in most cases) onwards. We outline these new disclosure rules below. 

Who needs to comply
These disclosure rules will impact Trustees of trusts with assessable income with a few exclusions for non-active trusts, New Zealand resident foreign trusts, Māori Authorities and those incorporated under the Charitable Trusts Act.
What additional information is required
Under section 59BA of the Tax Administration Act, the Commissioner, in applying her new trust information gathering powers, requires further information in addition to the minimum financial statement requirements.

This includes information about Trust earnings, settlements, settlors, beneficiaries, distributions and the nature of them, and persons with powers of appointment and any other information that may be required by the Commissioner.

What this means for you
We recommend trustees review what information is required as early as possible to consider the new disclosure requirements for the 2022 income tax year.

As part of the information we need from you to prepare your trust’s 2022 income tax return, we may also ask for the following:
  • A copy of the trust deed.
  • Copies of any relevant deeds noting changes to the trustees or beneficiaries.
  • Name, tax residency, tax identification number and date of birth for any Settlors, Appointers and Beneficiaries.
  • Information regarding the nature and value of non-cash distributions and settlements e.g. interest free loans, services provided under market value.
This will provide a large increase in compliance for trusts in that a lot of this information is not always readily available.

Check out this summary from Inland Revenue that introduces the changes for trusts for more information.

If you want to discuss your trust disclosure obligations, contact your Moore Markhams advisor.