A formal response has been issued by the Government announcing that it proposes to act on all recommendations arising from the Government’s Inquiry into Foreign Trust Disclosure Rules.
A summary of the Inquiry’s recommendations and the Government’s response
can be downloaded from our website. Specific proposals to be actioned in a Tax Bill to be introduced in August 2016 include:
- The establishment of a register of foreign trusts to be maintained by Inland Revenue initially and searchable “at this stage” by the Department of Internal Affairs and the Police.
- Requiring foreign trusts to be registered on establishment. This requirement will apply to all trusts formed after enactment of the enabling legislation. Existing trusts will need to register and provide the required information by 30 June 2017.
- Requiring foreign trusts to provide certain information on registration including details of settlors, protectors, non-resident trustees, any other natural person with effective control and underlying beneficiaries.
- The requirement that the person establishing the foreign trust, the settlor(s) and the trustees sign a declaration that they have been advised of and agree to comply with:
- the record keeping requirements in the Tax Administration Act;
- the Anti-Money Laundering and Countering Financing of Terrorism Act and Regulations;
- the Automatic Exchange of Information/Common Reporting Standard requirements (once enacted).
- Removal of the “safe harbour” for foreign trusts that have a qualifying resident foreign trustee. This means that the lesser sanctions that apply to trusts that have had the benefit of the safe harbour will no longer apply.
Finance Minister Bill English and Revenue Minister Michael Woodhouse stated in their joint press release:
The Shewan Inquiry’s recommendations are sensible and well-reasoned and by acting on all of them, we will ensure that our foreign trust disclosure rules are strengthened and New Zealand’s reputation is protected.
The changes to the foreign trust rules are a matter that the Government intends to move quickly on.
The Government intends to introduce legislation to require a register that is searchable by Internal Affairs and the Police, and annual disclosure requirements in the coming months.
Mr Woodhouse says that while the Government agrees with all of the recommendations from the Shewan inquiry, the way in which a small number are implemented will be tweaked.
Please contact your usual TGT Legal adviser if you would like to discuss your specific circumstances.