Trust and Estate Income

Types of Trust
If you received estate or trust income that relates to the year 1 April  to 31 March, show it in your tax return.

There are 3 types of estates or trusts:

  1. Qualifying
  2. Foreign
  3. Non-qualifying.

1. Qualifying trusts

They are trusts that have been taxed in New Zealand on all their income since the date they started. They include trusts settled by New Zealand residents with New Zealand trustees, estates of people who were New Zealand residents when they died, and other trusts that have elected to become qualifying trusts. Include beneficiary income that is distributed to you by the trust.

Do not include other sorts of distributions, as they are exempt from tax.

Distributions of beneficiary income to which the minor beneficiary rule applies are taxed as trustee’s income. This means the trust is subject to tax on this income at 33 cents in the dollar, and it is included in the trustee’s tax calculation in the IR 6 return. These distributions should not be included in the minor’s individual tax return.

2. All other trusts

They are non-qualifying or foreign.

What to Show in Your Tax Return

Add up the tax paid by the trustees and print the total in the appropriate Box. Print your share of the estate or qualifying trust income in the return.

If your estate or trust income includes:

  • Interest, withholding tax and gross interest show it
  • Dividends with imputation credits attached - show them also with dividend imputation credits, withholding payment credits and gross dividends.

Income from Foreign and Non-qualifying Trusts

If you are a beneficiary of a foreign or non-qualifying trust you must fill in a Schedule of beneficiary’s estate or trust income (IR 307) form.

Distributions from Non-qualifying Trusts
Copy the amount of taxable distributions from the non-qualifying trust and attach the IR 307 to the top of your return.

IRD separate taxable distributions from non-qualifying trusts because the taxable distributions are taxed at a different rate. If you have this type of income, your tax calculation may not be correct.

IRD will do this calculation for you and send you a notice of assessment.