IRD Changes to Trust Reporting Requirements

Trustees will need to provide additional information about a trust’s:

• earnings
• financial position
• settlements
• settlors
• distributions
• beneficiaries
• powers of appointment.

Any trust that derives assessable income in a year will be required to provide these additional
disclosures for that year, starting from the 2022 income tax year.

Your Kendons advisor will be in contact with you when preparing your 2022 work to collate any
extra information required as  part of the disclosures.

Please note that there will be an extra fee for the time required to compile the information and
complete these new disclosures.

Who needs to comply?

All trusts who receive income in a year will need to comply with the new rules and provide
additional information when they file their return.

The only trusts that are excluded are:

• non active complying trusts (that have filed an IR633 non active trust declaration)
• foreign trusts
• charitable trusts
• trusts that are eligible to be Maori Authorities
• widely-held superannuation funds
• exempt employee share schemes
• debt funding special purpose vehicles
• energy lines trusts.

Additional disclosures

 The additional disclosures required for trusts in the IR6 are:

• a statement of profit or loss
• a statement of financial position
• the amount and nature of all settlements made to the trust in the income year (excluding
  minor services incidental to the activities of the trust provided at less than market value).
• the name, date of birth, jurisdiction of tax residence, and IRD number/tax identification
  number of all settlors who have made a settlement on the trust in the income year, or
  settlors whose details have not previously been supplied to Inland Revenue. A settlor is
  anyone who has transferred value to a trust, whether money or money’s worth, and do not
  need to be named in the trust deed as a settlor.
• the amount and nature of all distributions made by trustees of the trust in the income year
  (excluding minor, non-monetary distributions that are incidental to the activities of the
  trust). A distribution is any transfer of value, whether money or moneys worth, from a trust
  to a person because they are a beneficiary of the trust.
• the name, date of birth, jurisdiction of tax residence, and IRD number/tax identification
  number, of all beneficiaries receiving such a distribution in the current year, along with all
  movements in the beneficiary current accounts.
• the name, date of birth, jurisdiction of tax residence, and IRD number/tax identification
  number, of each person having a power of appointment under the trust deed (including
  the power to appoint or dismiss a trustee, add or remove a beneficiary, or amend the trust
  deed).

Financial statements

 In addition to the above disclosures, from 31 March 2022 most trusts will also have to prepare
financial statements.

While these financial statements are not filed with the IR6, they must be available if Inland
Revenue requests to see them.

Reference