Foreign exemption trusts

A trust is a foreign exemption trust for an income year if no complying trust election is effective for the year and one or both of the following apply:

• No settlor of the trust has been resident in New Zealand at any time from the later of 17 December 1987 or the date on which a settlement was first made onto the trust; and/or
• The trustee of the trust uses, or has previously used, the foreign sourced income exemption under Section HC 26 of the Income Tax Act 2007.

We refer to these trusts as New Zealand foreign trusts (NZFTs).

For the NZFT to receive a tax exemption for foreign-sourced income, the contact trustee must:

• register the NZFT with us
• comply with ongoing disclosure and annual return processes. 

The information in this section is a general summary of the tax obligations for NZFTs. You can find more information in the 'Special report on foreign trust disclosure rules' on our policy website.

Special report on foreign trust disclosure rules (Tax Policy)

Registration requirements

Foreign exemption trusts (NZFTs) can apply for registration at either the trusts:

• establishment date, if starting with a New Zealand resident trustee,
• appointment of a New Zealand resident trustee
• income tax return due date for the return which a trustee meets the requirements to be a foreign exemption trust.

NZFTs may have more time to register if all trustees are:

• natural persons
• not professional trustees
• being appointed as trustees of their first foreign trust.