Additional reporting requirements for NZ domestic trusts

The IR6 tax return now asks for additional information about the trust's financial performance and position, including:

• net profit or loss before tax
• assets (for example, land, buildings, and shares - and the methods used to value these assets)
• liabilities (for example, loans and other money the trust owes to creditors)
• equity (this means assets available to trustees after liabilities are taken into account).

If the trust would usually file an IR3R (rental income), IR3F (farming income) or IR10 (financial statement summary for business activities) form then they should continue to do so if they conduct those types of activities. These forms should only capture the transactions that relate to the specific activity.

The fields on the IR6 are intended to capture all income, expenses, assets and liabilities of the trust, even where those assets are not used to derive assessable income - so for many trusts these values will differ from their IR10.

A settlement is any transfer of value from a person (or entity) to a trust. A transfer of value is the giving or doing of something for less than market value.

Please give us details of any settlements made to the trust:

• details of the person (or entity) who made the settlement (the settlor)
• the nature and amount of the settlement.

These details are entered onto the 'Trust settlor details' (IR6S) form.

Settlor details required

Please include details of the settlor, including the name and date of birth (or commencement date for companies or other non-individuals), jurisdiction of tax residency and IRD number or Taxpayer Identification Number (TIN) for non-residents.

You need to give us details of any person (or entity) who has ever been a settlor of the trust (including historical settlors), but you won’t need to tell us the amount or nature of any historical settlement. For current year settlements, you must include the details of the settlor and the amount and nature of the settlement.

Settlement details required

The nature of settlements is broken down into the following categories:

• cash
• financial arrangements
• land
• buildings
• shares
• services
• other.

If a settlement is of minor services that are incidental to the activities of the trust, you do not need to disclose it.

Loans

A loan to a trust is not a transfer of value so this is not a settlement. If the loan is later forgiven, the forgiveness is a settlement, and if the lender does not charge interest on the loan they also become a settlor.

A beneficiary is a person (or entity) who can benefit or does benefit from a trust.

Trustees can choose to allocate beneficiary income or make distributions to beneficiaries.

If a person receives an allocation of beneficiary income or a distribution during the year, please complete the 'Estate or trust beneficiary details' IR6B form, and identify the nature of the distribution under the following categories:

• accounting income and any other amounts
• corpus
• capital
• use of trust property at less than market value
• distribution of trust assets
• forgiveness of debt.

In another section, you're asked to show the transactions into and out of the beneficiary's account.

Non-cash distributions that are minor and incidental to the activities of the trust do not need to be disclosed. There is no requirement to disclose details of beneficiaries or distributions that happened in the past, only those from the 2021-2022 year onwards.

You'll need a separate IR6B for each beneficiary.

A person (or entity) who holds a power of appointment has the legal power to add or remove trustees, add and remove beneficiaries, or alter the terms of the trust deed.

From the 2021-2022 income year onwards, trusts must tell us the details of any person (or entity) who holds a power of appointment. The details required are:

• full name
• date of birth (or commencement date for companies or other non-individuals)
• jurisdiction of tax residency
• IRD number/Taxpayer Identification Number (TIN)
• commence date (that the person acquired the power of appointment)
• cease date (that the person ceases to hold the power of appointment).

You can submit details of powers of appointment through your income tax account in myIR by selecting 'Manage power of appointment' or by paper through the post.