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Trusts and estates
Nga Kaitiaki me nga Panga Tuku Iho
Learn about the tax rules that apply to trusts and estates, including how a trust's income is divided up for tax purposes and how each part is taxed. The information in this section does not apply to unit trusts, as these are treated as companies for income tax purposes.
Explaining the important concepts

Learn about the formation of a trust or estate, the information that we must receive, the trusts income and complying trusts (formerly qualifying trusts).

Filing tax returns

The trustee must file an Income tax return - estates or trusts (IR6) for the trust each year (this return is separate from the trustee's own personal tax return). A person who receives beneficiary income from any type of trust, or a taxable distribution from a foreign trust, must include this income in their tax return for that year, and pay tax on it at their normal rates.

How the trust's income is taxed

The tax on a trust's trustee income is calculated at a flat rate of 33 cents in the dollar for all three different types of trust. Beneficiaries who are New Zealand residents are liable for New Zealand income tax on all their income, from any source in the world. Beneficiary income they receive from any trust will be taxable in New Zealand, at their normal income tax rates.

Beneficiaries

As well as distributing beneficiary income, a trust can distribute money or assets to its beneficiaries in any of these ways: by distributing trustee income accumulated in previous years; by distributing capital profits or gains made from disposing of some of its assets or property; by supplying trust property or services to the beneficiary for less than full value; by acquiring property or services from the beneficiary for more than full value; by making a distribution from the trust ’s corpus.

Types of trusts

For income tax purposes, there are three distinct types of trust: complying trusts (formerly qualifying trusts), foreign trusts and non-complying trusts (formerly non-qualifying trusts). This distinction is important, because the type of trust determines whether some distributions from a trust are taxable.

 

 


Date published: 23 Nov 2004

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