Disclosure requirements for active trusts 2021/2022

The Government is interested in the use of trusts, particularly its income taxed at 33% compared to individuals whose income exceeds $180,000, taxed at 39%. Beginning with the financial year ended 31 March 2022, there are now required disclosures to be made to Inland Revenue by trusts in their taxation submissions or returns. While these disclosures are not new, mainly, for any trusts that have prepared annual accounts, they are now required for all domestic trusts with taxable income. These need to be provided, in an acceptable form, to IRD.

Trusts that are non-active, foreign, charitable trusts or Māori authorities or other specialised trusts do not have to make these disclosures.

The disclosure requirements have two types—simplified and non-simplified. Simplified reporting is available for trusts that have less than $100,000 in taxable income or deductible expenditures AND have total assets valued at less than $5 million. (Excluded from these amounts is income from sales of residential property caught by the bright line test.)

The Simplified disclosure requirements include

• A profit & loss statement
• A statement of financial position (balance sheet)
• Details of all trust settlors
• Amounts & nature of any trust distributions made (unless minor)
• Details of beneficiaries receiving such distributions
• Details of appointers

For trusts that exceed the simplified criteria, additional reporting required beyond simplified reporting requirements include

• Accrual accounting be used
• Disclosure of previous year comparable information if available
• Statement of accounting policies (including how assets have been valued as between costs market or tax adjusted value)
• A list of fixed assets & depreciable property
• Reconciliation of taxable profit & loss to total profit & loss
• Detailed disclosure of transactions with related parties (unless at market value)

Submission of the required information must be in a form acceptable to IRD.

IRD may also require this information for years from 2013-2014.

When completing your trust’s 2022 taxation, we will advise on and confirm the requirements of these disclosures with you.

More information and a test whether your trust is required to comply can be found here or contact us if you’re unsure.

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