Foreign Tax Administration for Non-NZ Residents
Where a non-tax resident of New Zealand settles a Trust and there is no New Zealand resident making a settlement on the same Trust then the Trust is regarded as a foreign Trust for New Zealand tax purposes. A foreign Trust is not subject to tax in New Zealand on foreign income. This means that an offshore resident can establish Trusts under New Zealand law and have that Trust hold offshore assets and derive offshore income and there will be no tax to pay in New Zealand in regard of this. Often such Trusts will have Trustees based in
New Zealand that administer the Trust and in that instance there are disclosure requirements for that resident Trustee. They have to disclose to the Inland Revenue Department the name of the Trust, the name and contact details of any resident, foreign Trustees and disclose whether the settlor is resident in Australia.
Outside of these disclosure requirements there are no other tax obligations in New Zealand whilst the Trust remains a foreign Trust and its only source of income is offshore. If the settlor subsequently moves to New Zealand then the Trust needs to be converted to being a complying Trust by filing an election within 12 months of arrival. Note that this time frame is extended if you are a transitional resident to 12 months after the end of the 48 month period where you are exempt from tax on foreign income.
New Zealand Taxes
