Complying Trusts

September 17 2015

Help is here for a settlor who leaves New Zealand. In New Zealand we have a settlor-based tax regime. In broad terms if a trust has a New Zealand tax resident settlor for any part of an income year the trust is taxed on its worldwide income.

Previously, if a settlor migrated and was no longer a New Zealand tax resident, it was likely the trust would become a non-complying trust. Non-complying trusts are taxed at 45% on some distributions and these can include realised capital gains and accumulated tax paid retained earnings. Section HC33 of the Income Tax Act 2007 now allows a trust to remain a complying trust after the settlor becomes a non-resident. The change has been back-dated to take effect from the beginning of the 2009 income year.

This is an extremely complex area of law so if you think it applies to you, please contact us for further advice.

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