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Foreign Trust Disclosure Guide — Registration, Reporting, and Tax Rules in NZ

the foreign trust disclosure in New Zealand. The guide covers the IRD registration requirements for the foreign trusts, the annual disclosure obligations (the IR607 form), the foreign-sourced income exemption, and the penalty rules for the non-compliance.

Registration and Annual Reporting

New Zealand has the foreign trust disclosure regime that requires the trustees of the foreign trusts with the NZ-resident trustees to register with the IRD. The registration is done through the IR607 form — the Annual Return for the Foreign Trust. The disclosure includes: (a) the trust deed details, (b) the settlor information, (c) the beneficiary details, (d) the financial statements showing the trust income, the expenses, the assets, and the distributions, and (e) the foreign tax paid. The foreign-sourced income of the foreign trust is generally exempt from the NZ tax if the trust was settled by the non-resident and the settlor was not the NZ resident when the trust was created. The first registration and the annual return must be filed within the specified timeframes.

Penalties and Compliance

The non-compliance with the foreign trust disclosure rules carries the significant penalties. The late filing penalty for the IR607 is up to $500 per month, and the failure to register may result in the trust income being treated as the NZ-sourced and taxable. The IRD has increased the scrutiny of the foreign trusts following the OECD transparency initiatives. The NZ-resident trustees must keep the accurate records and file the annual returns even if the trust has no NZ-sourced income. See our Trusts Guide → for the general trust tax rules.