Staying Current
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Safeguarding your Foreign Trust Using a
Qualifying Resident Foreign Trustee
Using a qualifying resident foreign trustee as a trustee of your foreign trust can provide a useful safeguard against a failure to meet record keeping and disclosure requirements in New Zealand.
A trustee of a foreign trust resident in New Zealand is required to disclose the existence of the foreign trust to the IRD and is obliged to keep sufficient records to allow the financial position of the foreign trust to be readily ascertained.
Where the resident trustee is convicted of knowingly failing to meet its obligations, the foreign trust can become subject to tax on its worldwide income. A trust which uses a qualifying resident foreign trustee benefits from a safe harbour.
A qualifying resident foreign trustee is a person who is a member of an approved organisation or that has a director or other natural person in a position allowing significant influence over the management and administration of the person who is resident in New Zealand who is a member of an approved organisation. The approved organisations at present include the New Zealand Institute of Chartered Accountants, the New Zealand Law Society and the Society of Trust and Estate Practitioners (New Zealand Branch).
A professional trustee can provide advice on the management of your foreign trust with the added protection of ensuring your foreign trust is not taxed on its worldwide income if that advisor gets it wrong.
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