Looking to set up a trust but want to find out as much as possible about how it all works before seeing accountant and lawyer
At present my 6 rental properties are my only form of income - last financial year after losses (depeciation, loan interest etc) earned round $4000 and paid around $800 in tax for the financial year.
Question ? Will all income earned by the trust now be taxed at 33 cents in the dollar or can it still be at the current 14% (cause income under $14000) if I choose to do as it says in the IRD note below and get the trust to pay the beneficiary (me) directly ?
From the IRD website:
The tax on a trust's trustee income is calculated at a flat rate of 33 cents in the dollar for all three different types of trust. Beneficiaries who are New Zealand residents are liable for New Zealand income tax on all their income, from any source in the world. Beneficiary income they receive from any trust will be taxable in New Zealand, at their normal income tax rates.
Note: The trustee and beneficiary can agree not to have tax deducted from trust income before the beneficiary receives it. This is called having the income "transferred direct". This may be useful when the beneficiary has tax losses to offset against the trust income. If the income is transferred direct and the beneficiary does not pay any tax on it, the trustees can still be held liable for the unpaid tax.
At present my 6 rental properties are my only form of income - last financial year after losses (depeciation, loan interest etc) earned round $4000 and paid around $800 in tax for the financial year.
Question ? Will all income earned by the trust now be taxed at 33 cents in the dollar or can it still be at the current 14% (cause income under $14000) if I choose to do as it says in the IRD note below and get the trust to pay the beneficiary (me) directly ?
From the IRD website:
The tax on a trust's trustee income is calculated at a flat rate of 33 cents in the dollar for all three different types of trust. Beneficiaries who are New Zealand residents are liable for New Zealand income tax on all their income, from any source in the world. Beneficiary income they receive from any trust will be taxable in New Zealand, at their normal income tax rates.
Note: The trustee and beneficiary can agree not to have tax deducted from trust income before the beneficiary receives it. This is called having the income "transferred direct". This may be useful when the beneficiary has tax losses to offset against the trust income. If the income is transferred direct and the beneficiary does not pay any tax on it, the trustees can still be held liable for the unpaid tax.
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