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Trusts Guide — Trust Taxation, Trustee Rate, and Beneficiary Income in NZ

the trust taxation in New Zealand. The guide covers the trust structures (the "family trust", the "trading trust"), the trustee tax rate of 33%, the beneficiary income (the "beneficiary allocation"), the trust tax return (the IR6), and the settlor rules.

Trust Tax Rates

The trust income in New Zealand is taxed at the rate of 33% (the "trustee rate") for the income retained in the trust. The income distributed to the beneficiaries (the "beneficiary income") is taxed at the beneficiary's marginal tax rate (the "beneficiary's rate" — 10.5% to 39%). The trustee rate was increased from 33% to the current rate (the previous 33% was adjusted from 1 April 2024 — the rate remained at 33% in line with the top personal rate below $180,000). The trust must file the annual tax return (the IR6) by the 7th of July after the balance date (the "standard 31 March balance date" — the IR6 is due by 7 July of the following year).

Settlor and Beneficiary Rules

The settlor is the person who transfers the assets to the trust. The foreign settlor rules apply if the settlor is the non-resident (the trust may be treated as the "foreign trust" subject to the special disclosure rules). The beneficiaries can receive the distributions without the tax liability if the trust has made the "beneficiary allocation" (the allocation of the trust income to the beneficiary). The trust can also make the capital distributions (the "tax-free distributions" from the trust capital). The family trust is commonly used for the asset protection, the estate planning, and the income splitting. See our Family Trust Guide → for the detailed rules.