Thanks to new banking laws introduced in 2006, foreign trusts in New Zealand are subject to strict rules. Trustees now have to submit records to the Inland Revenue Department (IRD). The Foreign Trust Disclosure Form is one of the key documents required. The IRD also requires the details of the trust, including the trust deed, settlements, and financial records.
Michael Cullen is credited with the new tax rules in this area, which were introduced in 2006. Under the new rules, a New Zealand resident trustee belonging to a foreign trust must submit a Foreign Trust Disclosure form (IR607). Additionally, he or she must keep financial records and other documents for tax purposes.
These comprise of the trust deed, particulars of settlements and distributions (containing the name and address of the recipient), and particulars of assets and liabilities of the trust as well as the funds received and spent by the trustee. If the trust features a business, then the trustee should keep all the accounting records. All these records must be recorded in English and available in New Zealand or else heavy penalties may be imposed. The world standard money laundering legislation that was enacted in 2011 serves to enforce these new rules.
In 1999, he established his practice, the Cone Marshall Limited in New Zealand. The firm gives services on foreign trust, tax planning, succession, and structuring. The company also provides advice on management of trust and trustee through its affiliate company, the New Zealand Trust Corporation. The firm has its location on the Level 3, 18 Stanley Street Parnell 1052 with 11 to 50 employees.
Mr. Cone, however, attributed to the rise of foreign trusts to the safety and stability of the judicial and legal profession structure in the country. “New Zealand has a global reputation for being a safe place to base one’s assets.” Mr. Cone said.
He went ahead to praise trustees in the form of trust lawyers and accountants for maintaining the country’s image in regards to international trusts. Mr. Cone added, “Trustees who handle foreign trusts on behalf of international clients have helped enhance New Zealand’s reputation in the OECD and among taxation experts globally.”
Some of the records to be stored for tax purposes included trust deeds, information on trust assets and liabilities, trustee expenditures as well as account details after every business transaction. In addition, the rule insisted that all the records need to be stored in NZ and must be submitted in English. The law stipulated that failure to follow this rule resulted in hefty penalties.