New Zealand Foreign Trusts
The New Zealand “foreign” trust is a normal trust with beneficiaries who may be non-residents or residents of New Zealand, but with a settlor who is non-resident in New Zealand.
Trusts are an integral part of the legal system of New Zealand, just as it is in most countries with common law and equity legal systems. New Zealand has developed its own approach to the taxation of trusts, based on the source of the trust funds. The residences of the trustees or the beneficiaries don’t play a part; essentially, taxation is based on the residence of the settlor (or grantor).
The 1988 taxation regime for trusts, particularly trusts with non-resident trustees, codified the New Zealand “foreign” trust. The tax code considers a trust “foreign” when the trust is settled by a settlor (grantor) who is a non-resident of New Zealand.
The New Zealand foreign trust is not subject to New Zealand tax, except on income with a source in New Zealand. This is true even if the trustees are tax residents of New Zealand and some or all of the beneficiaries are resident in New Zealand.
This condition of the New Zealand trust is also interesting for beneficiaries because if the beneficiary is a non-resident, only income sourced in New Zealand will be taxed but not on capital profits or gains –even if said capital gains or profits are sourced in New Zealand.
New Zealand has a network of double tax agreements which includes treaties with Australia, Canada, the United States of America, Japan, Singapore, Malaysia, Italy, France and the United Kingdom. A New Zealand foreign trust with a trustee resident in New Zealand should qualify as a resident of New Zealand for the purposes of a double taxation treaty. Nevertheless, in spite of this very brief introduction, it is strongly recommended that legal and tax advise be obtain in the country of residence or nationality of the interested party.
Aspen Fiduciaries Limited
assists in formation and administration of trusts & foundations in New Zealand.
Trusts and foundations can be used effectively in the development of efficient international tax planning and asset protection. We make banking referrals; provide accounting & audit services, and more.
Schedule of fees available upon request.
Contact us today for a New Zealand trust.
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Tel: (852) 3175-8758
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