Taxation of trusts Flashcards
1
Q
Trustee income
A
- Trustee income that Is not beneficiary income is usually taxed at flat rate of 39%
2
Q
Beneficiary income
A
- Subject to tax at beneficiary’s tax rate
2
Q
What is beneficiary income?
A
- Trust income paid to beneficryary during income year; or trust income that’s paid to benefcirary by later of:
- Six months after end of income year and earlier of date trust tax return filed AND date on which income tax return must be filed
3
Q
What is trustee income?
A
- Trust income after allowing for beneficiary income
- Subject to tax at flat 39%
4
Q
Exemptions to this to trustee income
A
- Trustee income is 10,000 or less
- Decreased estate in year of death and following four years
- Disabled beneficiary trust
Taxed at 33%
5
Q
minor beneficiary’s are taxed at…
A
39% if they are under 16 years and income is more 1000
6
Q
corporate beneficiaries are taxed at…
A
39%
7
Q
How is a trusts tax residence decided?
A
- Trustees of a trust are treated as a “notional single person”
If one or more trustees is a tax resident, then the trust is NZ tax resident
8
Q
What is a settlor?
A
A settlor is someone who transfers value to the trust, for the benefit of the trust or on term of the trust.
9
Q
Trust is charitable if:
A
- All income derived or accumulated in that or earlier years held for charitable purposes
10
Q
- Trust is complying trust if:
A
- All trustee income is taxed in NZ and no trustee income is non-resident passive income, non-resident foreign sourced income, exempt foreign sourced income; or members elected for trust to be taxed as if settlor and trustees were resident in NZ; or member of foreign trust elected to be a complying trust on the settlors becoming a resident; and all tax liabilities met since first settled.
11
Q
- Trust is foreign if…
A
from the date of settlement to any time in a period no settlor is a resident in NZ
12
Q
- If a settlor becomes a NZ resident they have…
A
- 12 months to elect to be a Complying trust
- If there is no election they become a non-complying trust
13
Q
what is a non - complying trust?
A
neither a complying nor foreign trust
