We have all witnessed the growth in Trust usage over the last decade. The use of a Trust has now become an accepted part of a risk management strategy and most accounting and law firm offer trust formation as part of the services they provide.
Up until now the Inland Revenue Department has taken little interest in Trust Compliance as long as Income Tax returns are properly filed and the values used in transferring assets represent market value. This is the case now but in the future things may be different. Trust usage has become so popular that it cannot be long before the IRD begins to take a more active interest. Indeed we understand than a Trust compliance unit of the IRD has been formed and based in the North Island.
When faced with any IRD audit information has to be properly recorded and readily available. If you are a Trustee of an existing trust ask yourself these questions:
• Do I have a Trust minute book, that holds copies of all trust documents.
• Have all Trustees decisions been properly recorded and signed by all the Trustees.
• Do I have copies of valuations to substantiate the value used when assets were sold to the trustees.
• Were the settlor’s reasons for creating the Trust properly recorded and held on the Trust Minute book.
• Does the Trust have a written investment strategy.
These are all questions that an IRD auditor is likely to ask. As a Trustee you are personally responsible for the Trust records so if the answer to any of the above is no then you may wish to put your Trust records in order.
Information brought to you by NZ Trustee Services Ltd
In mid 1999 Jonathan Cron identified the need for a Trust company that would not only set up and manage their clients’ trusts but to also educate the client in the processes involved to allow them to make informed decisions. Canterbury Trustee Services Ltd was born and quickly out grew its humble beginnings as a one man operation, becoming New Zealand Trustee Services Ltd in 2004 to reflect the new focus on providing Trust services nationwide. We are now one of the fastest growing Trust Companies in New Zealand with over three thousand clients and counting.
Call 0800 NZ TRUST (0800 698 787)
DISCLAIMER: GrownUps is not making a recommendation to you. GrownUps accepts no responsibility for decisions made as a result of using the information provided.