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IS 19/04
19 Dec 2019

Income tax - distributions from foreign trusts

This interpretation statement discusses the tax treatment of amounts of money and property received by NZ residents from overseas, including by inheritance, that are potentially distributions from trusts. The tax laws are relatively complex when it comes to taxing distributions from trusts and with the advent of global information exchange between revenue authorities, Inland Revenue has increasing access to information about distributions from offshore to NZ residents. The statement will be especially useful for the significant number of migrants to NZ and the many New Zealanders with relatives overseas. The statement covers how to determine if the amounts actually come from a trust (especially when another country has no law of trusts, or the law is different to NZ), whether anything is beneficiary income or a taxable distribution from a foreign trust and when and how the ordering rules in s HC 16 might mean they are treated as taxable distributions when they might not otherwise appear to be. It also considers the law of administration of deceased estates to help determine at what point a trust might arise to make distributions taxable.

TIB Volume 32 No 1 February 2020