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HC 22: Use of tax losses to reduce taxable distributions from non-complying trusts
or “Using tax losses to lower taxable income from certain trusts”
You could also call this:

“Rules for trust income when you temporarily leave New Zealand”

This section of the law talks about what happens when you leave New Zealand for a short time. If you’re getting money from a trust and you stop living in New Zealand, but then come back within 5 years, there are special rules.

When you come back to New Zealand, you might have to pay tax on money you would have got from the trust if you had stayed in New Zealand. This includes money you would have received as a beneficiary or from a foreign trust or a non-complying trust.

The law says you get this money on the day you start living in New Zealand again. This means you might have to pay tax on it, even though you weren’t actually in New Zealand when the trust was giving out money.

If you want to know more about the specific types of income this covers, you can look at section CV 15 of the Income Tax Act 2007.

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Next up: HC 24: Trustees’ obligations

or “Trustees must manage and pay tax on trust income”
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Part H Taxation of certain entities
Trusts

HC 23Temporary absences of beneficiaries

  1. This section applies when—

  2. a person who is a beneficiary of a trust and who is resident in New Zealand stops being resident; and
    1. within a period of 5 years from the date of the end of their residence, they become resident in New Zealand again.

      1. The person is treated as deriving income under section CV 15 (Amounts derived from trusts while person absent from New Zealand) to the extent to which they would have been treated as deriving an amount of beneficiary income or a taxable distribution from a foreign trust or a non-complying trust if they had remained in New Zealand for the period of their absence.

      2. The amount is treated as derived on the day on which the person becomes resident in New Zealand again.

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