The New Trust Act 2019
The New Trust Act 2019
There is a transition period of 18 months before the start of this new trust act from 30th of January 2021,
Principles: Every person performing a function or duty or exercising a power under the Act must have regard to the following principles:
- A trust should be administered consistent with its terms and objectives as stated in the Trust deed.
- A trust should be administered in a way that avoids unnecessary cost and complexity
The trustees are accountable for the way the trustees carry out their duties imposed on the trustees by law.
The maximum duration of the trust is now 125 years, trustees must be familiar with all core documents and they also must hold a copy of those documents, including financial statements for the whole 125 years. Beneficiaries have rights and trustees must provide certain information to them.
Special Trust Advisers (STA)
Trustees can call upon STA on any trust matters STA aren’t trustees or have trustee powers and duties. An STA is often your accountant or legal counsel if they are not already a Trustee.
▪ A trustee may consult the STA on any matter relating to the trust
▪ Isn’t required to follow the STA’s advice
▪ Isn’t liable in a proceeding brought by or on behalf of a beneficiary for an act or omission the trustee makes as a result of following the STA’s advice unless it involves a trustee’s dishonesty, wilful misconduct, or gross negligence.
Over the next 18 months before the new act takes effect it may be prudent for the Settlor/s and Trustees to ask themselves these questions:
Is the Trust required?
Is the Trust instrument fit for purpose?
Ring-fencing rental deductions (losses)
From the 2019-20 income year, new ring-fencing rules apply to residential property deductions. Ring-fencing means residential property deductions can only be used to offset income from residential property. You cannot use rental losses to offset other income like salary and wages.
Under the new rules, you can only claim deductions up to the amount of income you earn from the property for the year.
You must carry forward deductions over that amount. You can use these deductions to offset your rental income in future income years.
Cheques to Inland Revenue
Inland Revenue is becoming increasingly digital in the way they work. With most already choosing to pay their taxes electronically. In contrast, cheque usage continues to decline every year.
Continuing this shift, from 1 March 2020, Inland Revenue will no longer be accepting cheques. This includes post-dated cheques
(cheques dated after 1 March 2020).
Accountants angry at Inland Revenue 'confusing' clients
If you are getting unwanted correspondence from Inland Revenue view the link below:
HAVE WE GOT YOU THINKING?
Give us a call on (04) 563 6965 or email: dennis@taxman.co.nz or shawn@taxman.co.nz
Keep an eye out for December’s article
TAX DATES TO REMEMBER
- 20th November. 2019 - monthly employers PAYE payment…
- 28th November. 2019 - Bi-monthly GST Return for September/October 2019…