Family Trusts with assets managed by an investment manager


Trustees of trusts with only a small portion of the trust’s assets managed by an investment manager have been concerned to understand whether this will trigger a FATCA registration requirement.

On 16 October 2015, the Inland Revenue released the latest draft guidance on the application of FATCA to trusts which has reinforced the view that where any of the trust’s assets are managed by an investment manager, the need to register may arise.

As in earlier draft versions of this guidance, the draft provides examples of trusts which would be deemed to be a foreign financial institutions (and therefore be required to register for FATCA) by reason of having assets of the trust managed by an investment manager. In one example, it illustrates that even when only a small part (20%) of a trust’s assets are managed by a fund manager which is an “in business” investment entity, the trust can be deemed to be a foreign financial institution and required to register for FATCA (see example 5 on page 16 of the draft guidance). As such, according to the guidance, there is no minimum percentage of trust assets that must be managed by a fund manager for the trust to be classified as a foreign financial institution.

The meaning of a trust “resident in New Zealand” has also been broadened from the initial definition proposed by the Inland Revenue. The Competent Authorities of New Zealand and the United States of America have entered into an agreement defining trusts as “resident in New Zealand” if its trustee is resident in New Zealand. The new definition comes into effect from 1 April 2017.

Click here to read the draft guidance. 
Contact us
+64 9 920 8660
South British Insurance Company Limited Building
Level 7
3-13 Shortland Street
Auckland 1140
New Zealand