Two recent legislative changes potentially assist trustees of trusts with early (or short) vesting dates. Occasionally we see trusts with vesting dates of less than 80 years, and with no power to vary the trust deed. There can be many valid reasons to want to keep a trust about to vest ongoing. One solution has…
It has been common practice in NZ for trustees distributing income to beneficiaries (typically those on a lower marginal tax rate) not to distribute the cash, but to leave the amount outstanding, thereby creating a beneficiary credit current account. Two issues arise with that practice. First, if the current account has been in place for…
Many New Zealanders own their family home or bach in a trust, for a variety of reasons. A tax problem can arise where the family home property is developed or subdivided, and that property is owned by the trustees of a trust. Where work is undertaken developing or subdividing land within ten years of its…
Tax concessions are available for property transferred under a Relationship Property Agreement (RPA). Subpart FB of the Income Tax Act takes the approach that the recipient steps into the shoes of the transferor, so that no tax implications arise with the transfer. However, the parties and their advisers should take into account any deferred tax…
The Inland Revenue (IR) has confirmed NZ trusts can have a dual classification for tax purposes, as both a complying trust and a foreign trust. This comes as IR have finalised their updated Interpretation Statement on the Taxation of Trusts. It’s not an unusual situation to have a dual trust. For example, NZ’ers who are…
Inland Revenue recently issued a draft interpretation statement, PUB0061, on NZ tax law as it applies to trusts. The draft statement seeks to update the 1989 statement, and we attach a copy of our submission on certain of the tax issues that we thought deserved comment. Once the statement is finalised, it will become Inland…
The latest Court of Appeal decision in the Hugh Green estate/trusts saga makes sobering reading. Everyone lawyered up: there were four sets of instructing lawyers, six barristers, four of whom are QC’s, involved in the proceedings and the Court ordered the costs of all parties to be met by the trust funds. Shades of John…
