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Income Tax Act 2007

Taxation of certain entities - Trusts

HC 26: Foreign-sourced amounts: resident trustees

You could also call this:

“When NZ trustees don't pay tax on overseas income”

This law talks about when a New Zealand trustee doesn’t have to pay tax on money that comes from outside New Zealand. You don’t have to pay tax on this foreign money if:

  • None of the people who set up the trust (called settlors) live in New Zealand during that year. If there are no settlors left, the last one must have been living overseas when they died.

  • The trust hasn’t chosen to be taxed differently under another rule.

  • The trust isn’t a superannuation fund or a trust set up by someone’s will if that person was living in New Zealand when they died.

  • The trust is properly registered and follows all the rules about keeping records and giving information to the government.

  • The money isn’t income for a young person (called a minor) that is treated like it belongs to the trust.

If the trust doesn’t follow all the rules exactly, it might still be okay if the trustee can show they tried their best to follow the rules and fix any mistakes.

This text is automatically generated. It might be out of date or be missing some parts. Find out more about how we do this.

View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1517324.

Topics:
Money and consumer rights > Taxes
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HC 25: Foreign-sourced amounts: non-resident trustees, or

“Rules for taxing overseas income of non-resident trustees”

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HC 27: Who is a settlor?, or

“Explanation of who counts as a settlor for a trust”

Part H Taxation of certain entities
Trusts

HC 26Foreign-sourced amounts: resident trustees

  1. A foreign-sourced amount that a New Zealand resident trustee derives in an income year, and is included in trustee income for the income year, is exempt income under section CW 54 (Foreign-sourced amounts derived by trustees) if—

  2. no settlor of the trust is at any time in the income year a New Zealand resident who is not a transitional resident or, if no settlor exists in the income year, the last surviving settlor was a non-resident when that settlor ceased to exist; and
    1. no election under section HC 33 has been made for the trust; and
      1. the trust is not—
        1. a superannuation fund; or
          1. a testamentary trust or an inter vivos trust of which a settlor died resident in New Zealand (whether or not they died in the income year); and
          2. for a trust for which a resident trustee applies for registration within the period (the application period) given by section 59C of the Tax Administration Act 1994 and that is registered by the end of the income year (the post-deadline year) beginning next after the end of the application period,—
            1. the trust has a trust deed or a will or other document that creates and governs the trust; and
              1. the income year ends after the day on which the Taxation (Business Tax, Exchange of Information, and Remedial Matters) Act 2017 receives the Royal assent; and
                1. for an income year that includes part of the application period or is the post-deadline year, the trust is registered before the end of the post-deadline year and is not deregistered before the foreign-sourced amount is derived; and
                  1. for an income year beginning after the end of the post-deadline year, the trust is registered when the foreign-sourced amount is derived; and
                    1. the trustee complies with the requirements under sections 22, 59B, 59C, and 59D of the Tax Administration Act 1994 that the trustee must meet during the income year; and
                    2. for a trust to which paragraph (c) does not apply,—
                      1. the trust has a trust deed or a will or other document that creates and governs the trust; and
                        1. the trust is registered at the beginning of the income year; and
                          1. the trust is registered when the foreign-sourced amount is derived; and
                            1. the trustee complies with the requirements under sections 22, 59B, 59C, and 59D of the Tax Administration Act 1994 that the trustee must meet during the income year; and
                            2. the amount is not beneficiary income derived by a minor that is treated as if it were trustee income.

                              1. For a trustee to satisfy subsection (1)(c)(iii), (iv), or (v) or (d)(ii), (iii), or (iv) for an income year, the trustee must—

                              2. comply in the income year with the requirements referred to in the subparagraph:
                                1. satisfy the Commissioner that the trustee made reasonable efforts in the income year to comply with the requirements referred to in the subparagraph and to remedy the non-compliance.

                                  1. Repealed

                                  2. Repealed

                                  3. Repealed
                                  Compare
                                  Notes
                                  • Section HC 26(1): amended (with effect on 1 April 2023), on , by section 93 of the Taxation (Annual Rates for 2023–24, Multinational Tax, and Remedial Matters) Act 2024 (2024 No 11).
                                  • Section HC 26(1): amended, on , by section 140(1) of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
                                  • Section HC 26(1)(a): amended, on , by section 140(2) of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
                                  • Section HC 26(1)(ab): inserted, on , by section 140(3) of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
                                  • Section HC 26(1)(b)(ii): amended, on , by section 6(1) of the Taxation (Business Tax, Exchange of Information, and Remedial Matters) Act 2017 (2017 No 3).
                                  • Section HC 26(1)(c): inserted, on , by section 6(2) of the Taxation (Business Tax, Exchange of Information, and Remedial Matters) Act 2017 (2017 No 3).
                                  • Section HC 26(1)(c): amended, on , by section 78(2) of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).
                                  • Section HC 26(1)(c)(i): amended (with effect on 21 February 2017), on , by section 78(3) of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).
                                  • Section HC 26(1)(d): inserted, on , by section 6(2) of the Taxation (Business Tax, Exchange of Information, and Remedial Matters) Act 2017 (2017 No 3).
                                  • Section HC 26(1)(d): amended, on , by section 78(4) of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).
                                  • Section HC 26(1)(d)(i): amended (with effect on 21 February 2017), on , by section 78(5) of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).
                                  • Section HC 26(1)(d)(iv): amended, on , by section 140(4) of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
                                  • Section HC 26(1)(e): inserted, on , by section 140(5) of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
                                  • Section HC 26(1B) heading: inserted, on , by section 6(3) of the Taxation (Business Tax, Exchange of Information, and Remedial Matters) Act 2017 (2017 No 3).
                                  • Section HC 26(1B): inserted, on , by section 6(3) of the Taxation (Business Tax, Exchange of Information, and Remedial Matters) Act 2017 (2017 No 3).
                                  • Section HC 26(1B): amended, on , by section 78(6) of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).
                                  • Section HC 26(1B)(b): replaced, on , by section 78(7) of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).
                                  • Section HC 26(2) heading: repealed, on , pursuant to section 6(4) of the Taxation (Business Tax, Exchange of Information, and Remedial Matters) Act 2017 (2017 No 3).
                                  • Section HC 26(2): repealed, on , by section 6(4) of the Taxation (Business Tax, Exchange of Information, and Remedial Matters) Act 2017 (2017 No 3).
                                  • Section HC 26(3) heading: repealed, on , pursuant to section 6(4) of the Taxation (Business Tax, Exchange of Information, and Remedial Matters) Act 2017 (2017 No 3).
                                  • Section HC 26(3): repealed, on , by section 6(4) of the Taxation (Business Tax, Exchange of Information, and Remedial Matters) Act 2017 (2017 No 3).
                                  • Section HC 26(4) heading: repealed, on , pursuant to section 6(4) of the Taxation (Business Tax, Exchange of Information, and Remedial Matters) Act 2017 (2017 No 3).
                                  • Section HC 26(4): repealed, on , by section 6(4) of the Taxation (Business Tax, Exchange of Information, and Remedial Matters) Act 2017 (2017 No 3).
                                  • Section HC 26 list of defined terms beneficiary income: inserted, on , by section 140(6) of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
                                  • Section HC 26 list of defined terms minor: inserted, on , by section 140(6) of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
                                  • Section HC 26 list of defined terms non-resident: inserted, on , by section 140(6) of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
                                  • Section HC 26 list of defined terms trustee income: inserted, on , by section 140(6) of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).